The Dark Future of Solar Electricity

Guest Post by Willis Eschenbach

The “Annual Energy Outlook” for 2011 is just out from the US Energy Information Administration. The section called “Levelized Cost of New Generation Resources” looks at what are called the “levelized” costs of electric power from a variety of sources. Their study includes “renewable” sources like solar, although I’ve never found out exactly how they plan to renew the sun once it runs out. The EIA data in Figure 1 shows why solar will not be economically viable any time soon.

Figure 1. Levelized costs of the different ways of generating power, from the EIA. Blue bars show the capital costs for the system, while red bars are fuel, operations, and maintenance costs. Estimates are for power plants which would come on line in five years. Operation costs include fuel costs as appropriate. Background: HR diagram of stars in the star cluster M55 

“Levelized cost” is a way to compare different electrical generation technologies. It is calculated by converting all of the capita costs and ongoing expenses for the project into current dollars, and dividing that by the amount of energy produced over the lifetime of the plant. For the mathematically inclined there’s a discussion of the various inputs and calculations here. Levelized cost is the all-up cost per kilowatt-hour of generated power. The levelized costs in Fig. 1 include transmission costs but not the costs of backup for intermittent sources.

So why is this chart such bad news for solar electricity? It’s bad news because it shows that solar won’t become cheap enough to be competitive in the open market any time in the near future. Here’s why.

Now, please don’t get me wrong about solar. I lived off the grid for three years on a houseboat with solar power in Fiji, collecting sunshine and drinking rainwater. I am a solar enthusiast and advocate, there are lots of places where it is the best option.

But not on the grid. It’s too expensive.

Yes, it’s true that the sunshine fuel is free. And the operations and maintenance is cheap, 2 cents a kilowatt-hour. And as backers are always claiming, it’s the only technology where the capital cost is falling rather than rising, as the price of solar cells drops.

But here’s the problem. Solar cell prices have already fallen so far that only about thirty percent or so of the cost of an industrial-sized solar power plant is solar cells. The rest is inverters, and wiring, and racks to hold the cells, and the control room and controls, and power conditioners, and clearing huge areas of land, and giant circuit breakers, and roads to access the cells, and the site office, and half a cent for the transmission lines from the remote locations, and labor to transport and install and wire up and connect and test all of the above, and …

That means that out of the twenty cents of capital costs for solar, only about six cents is panel costs. Let us suppose that at some future date solar panels become, as they say, “cheap as chips”. Suppose instead of six cents per kWh of produced power, they drop all the way down to the ridiculous price of one US penny, one cent per kilowatt-hour. Very unlikely in the next few decades, but let’s take best case. That would save five cents per kWh.

The problem is that instead of 22¢ per kWh, the whole solar electric system at that point would have a levelized cost of 17¢ per kWh … and that is still two and a half times the price of the least expensive option, an advanced combination cycle gas turbine.

Finally, this doesn’t include the fact that when you add an intermittent source like solar to an electrical grid, you have to add conventional power for backup as well. This is so you will be sure to still have power during the time when the sun doesn’t shine. Even if you never use it, the backup power will increase the cost of the solar installation by at least the capital cost of the gas plant, which is about two cents per kWh. That brings the levelized cost of solar, IF panels dropped to a levelized cost of only one penny per kWh, and IF the backup generation were never used, to 19¢ per kWh … and that’s way more than anything but offshore wind and solar thermal.

However, it gets worse from there. The cost of fuel for the gas advanced cycle power plant is only about 4 cents per kWh. So even if gas prices triple (which is extremely unlikely given the advent of fracking), the gas plant cost will still only be about 14¢ per kWh, which is still well below even the most wildly optimistic solar costs.

And that means that the dream of economically powering the grid with solar in the near future is just that—an unattainable dream. The idea that we are just helping solar get on its feet is not true. The claim that in the future solar electricity will be economical without subsidies is a chimera.

w.

PS—On a totally separate issue, I suspect that the maintenance costs for wind power are underestimated in the report, that in fact they are higher than the EIA folks assume. For example, both wind and water are free, and the EIA claims that wind and hydro have the same operation and maintenance cost of about one cent per kWh.

But with hydro (or almost any other conventional technology) you only need to maintain one really big generator on the ground.

With wind, on the other hand, to get the same amount of power you need to maintain dozens and dozens of still plenty big separate generators, which are stuck way up at the top of really tall separate towers … and also have huge, hundred-foot (30 m) propeller blades whipping around in the sky. You can imagine the trek you’ll have when you forget to bring the size #2 Torx head screwdriver …

Do you really think those two systems, both feeding the same amount of power into the grid, would cost the same to maintain? Check out the windfarms and count how many of the fans are not turning at any given time …

0 0 votes
Article Rating
317 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
johnnyrvf
December 3, 2011 1:26 am

The latest Nuclear power stations are designed for a minimum life of 60 years and in the case of the new generation Thorium Reactors being designed in India, 100 years, what would be the levelized cost in cents of nuclear power if the length of the operating life cycle was taken into account?

December 3, 2011 1:30 am

Thanks for the cost comparisons, Willis, Your misgivings about the true costs of wind power are most likely justified. I can think of a few things that should be taken into account and possibly were not, Take standby power generation when the wind doesn’t blow (or blows too hard) and the wind turbines are just idling — when conventional generating capacity has to take up the slack, the cost of connecting wind turbines to the grid. Then there is the question of whether the cost estimates for wind power are based on the theoretical maximum capacity rating of the turbines or on the real generating capacity of around 22 – 24 percent of rated generating capacity.

coldlynx
December 3, 2011 2:00 am

Never thought I would disagree with You Willis, but on this I do.
You and US Energy Information Administration compare solar cells with other large scale electricity production alternatives. But solar cell is mainly, as on Your boat, a small scale solution for electrical consumers. Solar Cells have to be seen from small scale consumer perspective not from a large scale production perspective. With solar cell on my house will I get more independent from large companies, energy taxes and grid utility companies. I love that. Then can can I show them my longest finger. That feeling is worth a lot to me.
Price for PV panels is now below USD1 per watt and falling.
That give in Sunny states a annual output of up to 2 kWh electricity. Grid inverters are now also falling in price. It is in many places now a good investment for consumers but not for producers to get solar panels.
I have been in computer business since 1982 and I see a very similar development as the PC went through. Now is large scale computing made by many small PC processors. In the very near future will many small scale PV installations in total be producing larger amount of electricity than large scale production facilities. Just because it is good investment, for consumers.
And of the joy to get independent. A small scale revolution. 😉

Sunspot
December 3, 2011 2:16 am

Walter H. is correct. Now that alternative power plants have had a few years of running some interesting performance figures have come to light. The best the UK can get is around 17% for wind turbine and have their fair share of maintainence issues, network instability etc.. Here in Australia new subsidised solar panels have been running for more than a year. A 10kW solar unit shows that it can deliver around 40kwh per day averaged over 12months.
Denmark boasts that 50% of their generation capacity comes from wind turbines, however they only manage to deliver around 15% to 20% of their capacity. A typical coal fired generator can deliver around 90% of it’s 660mW name plate rating 24/7. You will need around 300 wind turbines to match that name plate rating only, but will never deliver 24/7.

December 3, 2011 2:20 am

But you are using logic and facts. That’s not the way the system works. Governments do what is politically in their interest to stay in governemnt. Even in a steadfastly nuclear France, the coming government will be a Socialist/Green combo. To support the Socialist to get enough votes the Greens have demanded that nuclear will be phased out completely. The Socialists have talked that down to downsizing from 80% to 50% by 2050. Totally absurd capital destruction and will cause a tripling of current electricity costs making France even less commercially competitive (if that is even possible )
To counteract this, the current government in the hopes of being reelected has now commissioned a huge offshore windpark. Go figure, your energy is practically 100% clean but lets waste a fortune we don’t have on pointless exercise. All to get reelected. That’s how it works, not if it’s in any way reasonable…

DirkH
December 3, 2011 2:40 am

Willis, inverters get cheaper, too. Gotta echo coldlynx in that regard. The trend is towards one inverter per module, and through some as yet unforeseen magic, we’ll have modules that we directly connect to the mains in 20 years; the inverter will be integrated into them.

Warwick Payten
December 3, 2011 2:42 am

I agree with your comments on the maintenance costs for wind. I do research and consulting work in the power industry, coal and gas combined cycle, and based on my experience the distributed nature of the wind turbines will increase the maintenance costs particularly as they age above the EIA assumptions .

Manfred
December 3, 2011 2:58 am

I think you didn’t consider efficiency improvements. These lower all cost components.

December 3, 2011 3:29 am

Willis:
Great piece. I looked at the utilization rate of Wind in Denmark which has very extensive experience over 30 plus years. The average utilization rateover the last 10 years is approximately 22% – by my calculation, i.e.,
Generated TWh*POWER(10,12)/(Capacity in MW*POWER(10,6)*365*24)
This seems to me to be a better estimate – it includes off shore generation capacity as well. (see http://en.wikipedia.org/wiki/Wind_power_in_Denmark)

Rob L
December 3, 2011 3:34 am

What it does’t factor in is distribution costs that are typically add $0.07-0.15 per kWh. In Southern California consumers typically pay $0.2 per kWh or more so PV power produced on your own roof can be pretty competitive.

Bloke down the pub
December 3, 2011 3:45 am

Willis Eschenbach says:
December 3, 2011 at 2:34 am
” I have no problem with that provided I’m not asked to subsidize it.”
I recently had a PV system installed which is planned to pay back in about eight years. That is based on the existing feed in tariff of 43.1p which is soon to drop to 21p for new installations. Even if the FIT is reduced to zero in the future, there will still be a hidden subsidy in that the rest of the suppliers customers are paying for the back-up supply for when the sun don’t shine.
I may not have put that very clearly, but I hope you get the gist.

Espen
December 3, 2011 3:51 am

Good post, Willis. Just one thing: when you complain about solar subsidies, don’t forget that fossil fuels are subsidized as well!

Edvin
December 3, 2011 3:58 am

The two obvious errors (or call them bad assumptions if you wish):
* A 34% capacity factor for wind is just wishful thinking
* A 30 year cost-recovery period overestimates the cost of both hydro and nuclear
The 30 year period might also effect other energy sources. However the relation between capital cost and the running cost of fuel and maintenance, and their >30 year life time, makes the choice of a 30 year period effect hydro and nuclear the most.

December 3, 2011 4:08 am

A couple of points.
I live in perhaps the sunniest city in the developed world Perth and have a rooftop solar unit. My unit delivers around 10 times more electricity in mid-summer than mid-winter. Yet I know my electricity consumption is almost the same. Clearly no saving in capital costs.
I heard a few weeks back from someone who maintains one of the biggest wind farms here in WA that they were offline for a month because mice chewed through the control cables. Distributed energy infrastructure and wildlife don’t mix.

Wolfgang Flamme
December 3, 2011 4:15 am

@coldlynx, Willis
For germany using hourly load and PV production figures over a year’s timespan it turned out that you’d need around 120 average supply-days of battery storage to make use of all your PV generation. Combining wind and PV turned out to be better (half the storage) but still prohibitive.

007
December 3, 2011 4:28 am

they really do hate nuclear!
11¢<12¢.

December 3, 2011 4:38 am

Solar power is still the best alternative for off-grid locations and activities, such as your boat, camping, holiday homes etc. I live in cloudy, rainy England but solar panels are appearing on roofs around the UK in increasing numbers.
http://solarpoweradviserz.com

December 3, 2011 4:44 am

WOW!!
Now that’s something that is worse then we thought !!!!

Wolfgang Flamme
December 3, 2011 4:48 am


re wind power capacity factors – In Germany, it’s less:
http://www.wind-energie.de/infocenter/statistiken
Turned out to be ~17% in 2009 and ~16% in 2010 (was more close to 20% some years ago). German win power incentives are designed to ‘take the pressure from the coast’ so less efficient inland locations receive some extra compensation.

jjthoms
December 3, 2011 4:51 am

see this earlier post for cost including backup and load balancing
http://wattsupwiththat.com/2011/11/20/duking-it-out-with-foreign-investors/#comment-804066
The US has very low gas/oil prices – the UK /EU pay up to 4 times the US
http://wattsupwiththat.com/2011/11/20/duking-it-out-with-foreign-investors/#comment-804815
windpower costs: http://wattsupwiththat.com/2011/11/20/duking-it-out-with-foreign-investors/#comment-808678
cost per kwh over 20 yrs £0.060 per kWh
cost per kwh over 15 yrs £0.069 per kWh
cost per kwh over 10 yrs £0.087 per kWh

Peter Hartley
December 3, 2011 4:56 am

Willis,
Thanks for bringing this article to our attention. I think a potentially more interesting story lurks in the comparison between wind and fossil fuels.
A number of assumptions have been made that make wind look more competitive than it really is. One wonders if this was a deliberate politically motivated directive rather than a series of innocent assumptions…
A number of people have noticed the very high capacity factor they have assumed relative to actual experience with wind.You also pointed out the maintenance costs appear to be low. The assumed 30-year life of all the plants also favors wind. Most experts would estimate the expected life of a wind plant at considerably less than 30 years — probably 20-25 years is more reasonable. On the other hand, most coal-fired plants are likely to be used for 40 or more years. Finally, buried in the fine print is an assumption that the discount rate is set 3 percentage points higher for fossil fuels than for renewables to account for GHG emissions! First off, a tax on CO2 (or its equivalent) would raise fuel costs, not the discount rate. Second, why throw this into a comparison of economic production costs.
When all these corrections are made, one finds, not surprisingly, that the costs of wind exceeds the cost of fossil fuel generation by about the amount that wind has to be subsidized to remain competitive.
As regards adding an amount for “backup capacity” that is, in a way, double counting the low capacity factor of wind, but not entirely. The short run intermittency of wind requires additional backup, not just its low average capacity use. In a sense, a discount should be applied to account for the lower quality of the wind power — or a cost added to make it of equivalent quality like you suggest. At the moment, I don’t think this cost would appear in the subsidies that wind generators need to receive to be competitive since the wind generators do not bear the costs that the low quality of their output imposes on the rest of the system.

Meyer
December 3, 2011 5:26 am

@coldlynx I see your point in spirit but not in practice.
If the goal is to “get off the grid”, the initial investment of a diesel generator is a fraction of solar. There is still the ongoing cost of fuel, but that’s the sort of thing you can stockpile over time when prices are favorable instead of making a huge commitment up front. You can also make biodiesel pretty cheaply if you buddy up with some restaurant owners. 🙂 Of course, there isn’t enough waste oil for everyone to do that. Generally I’m not a fan of any biomass fuel that requires fertile farm land to produce. High-lipid algae would be perfect if it could be grown in the desert or ocean and processed efficiently, but for now it makes solar look cheap.
But really I have to question the value of getting off the grid (if the grid is available) because the grid is relatively cheap and convenient. I don’t see how completely disconnecting from the grid would make me more “independent”, especially if it means a significantly greater fraction of my 10-hour day must be spent on electricity in order to sustain that independence. I do have a generator and enough fuel to last through a couple of weeks of a power outage, which I consider the worst-case scenario. Any worse scenario (e.g. war), and I’m not going to hang out in my house whether it has solar panels or a backup generator.

old construction worker
December 3, 2011 5:28 am

“But here’s the problem. Solar cell prices have already fallen so far that only about thirty percent or so of the cost of an industrial-sized solar power plant is solar cells. The rest is inverters, and wiring, and racks to hold the cells, and the control room and controls, and power conditioners, and clearing huge areas of land, and giant circuit breakers, and roads to access the cells, and the site office, and half a cent for the transmission lines from the remote locations, and labor to transport and install and wire up and connect and test all of the above, and …”
This is why the government wants wind and solar. It puts puts more people to work even though it is an inefficient use of capital. How many union workers does it take to change a light bulb? Six: One to get the ladder, two to hold the ladder, two watch and one to change the light bulb.

Bob Koss
December 3, 2011 5:40 am

Here is a weed covered 20 acre solar installation in green Germany that has only been in operation for about two years. Even with subsidies it apparently it isn’t worthwhile to do proper maintenance.
http://notrickszone.com/2011/07/04/weed-covered-solar-park-20-acres-11-million-only-one-and-half-years-old/

jheath
December 3, 2011 5:40 am

I have not come across a wind project at less than 13c per kWh excluding back up costs, and that one was in an especially good place and had some hidden tax breaks. 20c is much more typical – if you are lucky.
Most of the rest of the world of course has to pay about 3 times as much for natural gas at the moment compared with North America, so coal is coming in at lower cost for now elsewhere.
Solar PV is fine for the householder who wants it – but please do not continue to expect everyone else to subsidise it and take any excess at ridiculously high prices in the euphemistically named feed-in tariffs – which are subsidies to the rich from the poor.

December 3, 2011 5:58 am

Espen says:
December 3, 2011 at 3:51 am
Good post, Willis. Just one thing: when you complain about solar subsidies, don’t forget that fossil fuels are subsidized as well!
=====================================================================
Really??
Can you name those “subsidies”??
Don’t confuse the tax code with “subsidies”

RockyRoad
December 3, 2011 5:58 am

I understand the 25-30 year life on wind installations is a pipe dream–more likely they wear out and self destruct in about 7 years, depending on quality of manufacturing, service utilization and attention to maintenance. It will obviously require some time before the final numbers are in, but from what I’ve seen so far, the service range in years is much closer to 7 than 25-30. In that case, wind power becomes even more prohibitively expensive. I detect a “green” agenda in the numbers put forth by the IEA, as Peter Hartley above suggests.

RockyRoad
December 3, 2011 6:02 am

Willis Eschenbach says:
December 3, 2011 at 2:34 am


So solar is a “good investment” for consumers, but only because the consumer is already getting screwed to pay for that investment, with the ratepayer shelling out 50% above market for solar power.

Exactly, Willis! That’s consistent with the saying: “Anytime the government gets involved, it creates a surplus in one sector of the economy, a shortage in another, and the taxpayer makes up the difference.”
Obviously, free market, non-governmental investment decisions aren’t hindered with such illogical and destructive utilization of capital ($).

David
December 3, 2011 6:03 am

Willis – I have nothing but respect for your views – but you do seem to fail to raise the crucial flaw as far as solar is concerned.
For twelve hours a day (averaged), every day of the year, anywhere on the planet – solar panels produce zero – because its dark.

Bernd Felsche
December 3, 2011 6:04 am

E.On is one of Germany’s biggest operators of land-based wind power generation (6+GW in nameplate capacity); in addition to their other generating facilities. Their areas of operations stretch from the North coast to the Alps; roughly 1000km. In their wind power report of 2005, they published a utilisation of about 16% and a conventional shadow capacity (spinning reserve) requirement of 98%. They state that wind power is limited due to its unpredictable behaviour; which requires a electricity separate grid from the main one, to reap the full potential. In terms of expanding capacity; they (IIRC) also stated that all the premium wind areas are being used, so further expansion would be to sites with poorer returns.
So more wind power means more power stations capable of ramping up and down quickly to fill the holes in demand that wind power cannot supply. Oh, and lots more high-tension power lines.
Still, it’s good for the Austrian economy and investors, who are expanding their pumped storage capacity; “buying” surplus electricity from (e.g.) wind power at a peppercorn to pump up the storage; and then sell back electricity at a premium, peak price when it’s desperately needed. It’s worth billions of Euros a year. They call that electricity “generation”, for some reason only comprehensible to politicians and marketing managers. So they’re all in favour of wind power in Germany. (And extremely peeved at the Czechs for having the temerity to expand their nuclear power capacity.)

December 3, 2011 6:04 am

Wolfgang:
Thanks for the link. There is apparently a lively debate in Denmark over the continued expansion of wind generated electricity with a target of 50%. I am looking to try to nail down the actual costs of wind. The Danes put a huge tax (beyond VAT) on household electricity consumption which turns the estimated generation and distribution costs from about average for the EU15 to the most expensive. It is unclear where that tax money goes.

JC
December 3, 2011 6:08 am

The one thing you all perhaps realize but are not saying:
According to the greens, cheap, available electricity is bad. Expensive electricity is *good*. It is ther *goal*.

chris y
December 3, 2011 6:19 am

I agree with Willis’ conclusion that, even if solar panels are free, the system costs will not drop dramatically. The recent plunge in solar PV panel prices is indicative of an industry whose profit margin has imploded. Some estimates predict over 95% of solar PV companies in China will be bankrupt and gone by end of 2012.
Another interesting trend is the large number of planned large solar thermal projects that have switched to solar PV this year.
The DOE Sunshot program has 2020 goals for solar PV of $0.5/W for panels, $0.4/W for balance of system, and $0.1/W for power electronics. This, of course, is based on peak DC power at beginning of life, and it does not include labor. Even if these goals are met, solar PV still requires backup energy storage, be it hydro, nuclear or fossil fuel in tanks or coal sheds.
DirkH- “The trend is towards one inverter per module”
I agree with this. I finally decided to install grid-tied solar PV for my home. The problem with one inverter per module today is that the inverter is now almost as expensive as the module. I just paid $0.80/W for the panels, but I see prices of $1/W for the micro-inverter vs $0.5/W or less for multi-panel inverters.
This will change. It is clear to me that the inverter electronics could easily be integrated into the module envelope without any new engineering breakthroughs. I suspect this will start to appear (at a premium price) in the next few years.
I decided to go DIY for my solar PV project after I received a contractor quote of $10/W for what I wanted to have installed. My DIY total cost (panels, inverters, wiring, support structure, feeder to house) will be about $1.15/W after the federal tax credit. Interestingly, this is already close to DOE’s 2020 goal, since my DIY also does not include the cost of labor 🙂
Our utility offers net metering integrated over one year. Any excess generation is reimbursed at the wholesale cost of bulk electricity, about $0.05/kWhr.
I estimate a break-even time of about 6 years here in Florida. Unless we get bulldozed by a major hurricane, of course.

December 3, 2011 6:21 am

Wolfgang: What is the translation of 37,3 Mrd kWh? I assumed it was a million kWh. Thanks.

you
December 3, 2011 6:25 am

Will-
You pure speculation about wind power, and small easy to maintain generators is a tactlessly bs argument. Just admit wind works.

Lawrence Poe
December 3, 2011 6:28 am

Old Construction Worker says, “This is why the government wants wind and solar. It puts puts more people to work even though it is an inefficient use of capital. How many union workers does it take to change a light bulb? Six: One to get the ladder, two to hold the ladder, two watch and one to change the light bulb.”
If you’re an old construction worker, you no doubt know that you grossly underestimate the number of union workers it takes to change a lightbulb. I’ve dealt extensively with unions, and can tell you that it will take at least two journeymen electricians and one apprentice to ensure that the power is off to the line the bulb is on. Then the supervisor, after moving a small stack of 2x4s out of the way, will call a fork lift operator to move a couple of pallets of construction materials that will be in the way of the light-bulb changing operation. He’ll then run around the site to find a laborer to help him carry the ladder to where it is needed. Then the six you describe will proceed to change the light bulb, after which the above-noted two journeymen electricians (and one apprentice) will undertake to restore power to the line feeding the light bulb. The fork lift operator will then return the pallets of materials to their earlier place while the laborer does likewise with the 2x4s. Then the supervisor retires to the office with the union stewart to discuss the grievance the union is filing over the supervisor’s moving of the 2x4s and assisting in carrying of the ladder, instead of having laborers perform all such duties as required by the labor agreement. The grievance will then be heard by the construction superintendent and the union’s district rep, and will go on to a panel of three arbitrators, which will eventually award the most senior laid-off laborer $100,000 in back pay since the company should have had enough laborers on the site to ensure that bargaining unit work was only performed by laborers union members.
You obviously haven’t dealt much with unions if you think only six could possibly change a light bulb.

December 3, 2011 6:30 am

“Check out the windfarms and count how many of the fans are not turning at any given time …”
I did notice that both wind turbines at East Midland Airport were actually removed from their hubs and brought to the ground for maintenance within a few months of original installation. That is not cheap at all.
The other consideration with wind is we don’t know what figure they are using for how much each actually generates as a proportion of its capacity. Remember real figures have come out not much more than half of manufacturers estimates, so if the latter were used to calculate these you will be close to doubling all costs.

mike g
December 3, 2011 6:33 am

Contrary to the above, it IS extremely likely that gas prices will triple or quadruple if a large-scale shift away from coal to gas occurs, which is why it is not happening with the present low gas prices. Not to mention the fact that the EPA and states are going after fracking because it is push hydrocarbons and god knows what other chemicals into the water table and biosphere. And, don’t forget the peer-reviewed research covered in the past on WUWT that places a higher carbon footprint on gas than coal due to all the methane that leaks out into the atmosphere from the fracking operations.

Leigh
December 3, 2011 6:35 am

Willis, I think you are being generous to solar PVs when you assume that gas turbines can provide adequate back-up for when solar PVs can’t generate power (2c/kWh). If you have a look at the generation profile of a solar PV unit you will see that it can switch off and on almost instantaneously when a dark cloud passes overhead, or there is some other shadow. To respond in time you need the OC gas turbines running in stand-by mode (i.e. add the cost of burning gas) and battery/flywheel capacity to fill the gap until the gas turbine comes up to speed. If other sources can’t respond quickly enough then the voltage/frequency will drop and protection systems within the network will start load shedding.
The only way we get away with it at the moment is because solar PV generation is a relatively small fraction of the total generating capacity, and there is enough spinning reserve from existing coal/gas/nuclear power stations to cover. So the idea that costs will come down once we get ‘scale efficiencies’ may actually work in reverse with the cost of back-up escalating.
Also, the 2c/kWh capital cost for an OC gas turbine is probably an amortised cost assuming the turbine generates at a certain level over it’s expected lifetime, say 20% for an OC gas turbine peaking plant. If that now drops to say 10% to run in standby mode, then won’t the capital cost per kWh produced double to 4c/kWh?
But then we have to consider that using gas turbines as back-up is only an interim measure as gas still generates CO2. So to comply with the expectation of people putting solar PVs on their roof (that they are generating no greenhouse gases) backup will need to be purely from battery/flywheel etc. Then we start talking somewhere around 10 times the cost of coal/gas/nuclear for intermittent souces such as solar and wind. For the purists, they may want to do this, but I object when they start increasing the power bills of people on lower incomes through the subsidies.

Espen
December 3, 2011 6:35 am

Matthew W: it’s not my idea to call it subsidies: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2ygdsSj.KQI

David A
December 3, 2011 6:35 am

Another facet not fully considered in Willis’s excellent post is how over time and an increasing trend (Govt mandated of course) in the % of total power needs generated by solar and especially wind, the coast of operating traditional fossil fuel generation increases as density (revenue generated per coustomer) of their revenue stream decreases. The greater the percentage of wind and solar, the more expensive traditional sources become,
California citizens, already suffering from this, will be taught again in spades if the current policies are carried out. Energy is the life blood of every economy. If one wishes to reduce the population growth of a third world country, then simply make energy cheap and abundant. Current policies, predicated on fear of large poulations, will also reduce poulation growth, but tragically this will be through famine and war.

Ian W
December 3, 2011 6:36 am

The leveling fails to take into account the lifetime of the generation system. The life of a wind farm is actually considerably less than the theoretical figures quoted here. There are already over 14,000 abandoned wind farms in the USA (google it). They are becoming an environmental hazard. Willis you alluded to the problem of “the trek you’ll have when you forget to bring the size #2 Torx head screwdriver …” but there will not be a long queue of engineers wanting to work on top of a 400 ft pylon in winter gales in the middle of a rough sea. Unfortunately, the politicians have been listening to salesmen not engineers.

Sal Minella
December 3, 2011 6:38 am

The problem with small scale local installations of solar panels – i.e. residential installation, is that all other users of the grid pay for it. I live in upstate NY, a place where only a fool would pay the $100K + cost to energize their home with solar or wind yet, many people do. They are told that they can sell excess generation back to the power company.
These numerous sources of small random and intermittent “pops” of feedback to the grid are of no value to the power company by the simple nature of their randomness and intermittancy. The local grid has to supply 100% backup for these users while gaining absolutely no advantage from the electricity that they produce. In addition, NYSERDA a government organization, hands half of the cost of the installation to the individual user.
So, as a regular electric customer, I am paying for both the initial installation subsidy and the increased cost per KWH that results from the mandated buyback of worthless power by the grid operator.
I have no problem with off-grid use of individual windmills and solar panels but the grid connected homes with solar or wind do nothing but waste the materials used to build them and the energy used to back them up all at the cost of evveryone else in the neighborhood.
Ny staste assessments to cover these costs add up to about $.015 /KWH and nearly $.05/therm for gas. Thank you greenies, renewables, and all of you eco-schemers making a buck on the backs of your neighbors.

Bernd Felsche
December 3, 2011 6:56 am

Some time ago, I downloaded some insolation data from a nearby agricultural research station and plotted the result.
The graph shows total insolation (solar energy) onto a horizontal surface, over a month. Click here if no graph shows
It illustrates the high variability of “supply” over a year. A picture that those selling solar probably don’t want their prospective customers to think or to be able to make a rational judgement.
What the graph doesn’t show is the number of successive the dull days, when there isn’t enough sunshine to generate any worthwhile amount of electricity. To do that, I’d have to pick an arbitrary figure for “dull” like 1 standard deviation below average. And then you get a maximum of 2 weeks of dullness. But I’m not sure if those were the weeks in which the person responsible for cleaning the bird droppings off the heilostat was on vacation. Between 3 and 5 consecutive days of dullness are common. (I really need to get to grips with R because analysing a decade+ of daily weather data in a spreadsheet is a RPITA)

Barry R
December 3, 2011 7:02 am

I’m a big fan of solar panels for individual consumers. They add a lot of flexibility and resilience to your life-style. Large-scale utility stuff: Never saw the point to it. Among other issues, if you make it really large-scale you come up against real undoubted human-induced warming, though probably not on a huge scale. Cover a huge area in something black and intentionally non-reflective, which converts 15-20% of the incoming solar light to electricity, and what happens to the other 80-85% of the incoming solar energy? Can we say waste heat? The immediate surroundings of a large scale solar plant will be much hotter than they would be naturally.
You can get higher efficiency in solar, but currently at a cost that means it only makes sense to use the cells in concentrator systems, which are okay for large-scale systems, but I wouldn’t want on my roof because of the heat issues.
I wouldn’t write grid-tie solar electricity off completely though. The key is to get the efficiencies up inexpensively and the balance of system costs down. Pure silicon cells are approaching the theoretical max for the technology, but people keep finding ways to squeeze a few more percent out of it, and I suspect that someone will figure out a way to mix materials in an inexpensive way. Hit 30% efficiency and a lot of the balance of system costs go way down because you’re working with smaller panels for unit of electricity and that impacts land used, labor, etc. Barring a breakthrough that won’t happen before 2016, but long term higher efficiency is what you really want in solar.

Don K
December 3, 2011 7:04 am

Nice article Willis. In general it looks fine. I’m a bit surprised that geothermal is so inexpensive. I assume that the costs are some sort of blend of existing sites which are highly optimized. I wonder if they include the disposal costs of high temperature brines such as those exploited in the Imperial Valley. I also wonder if the costs are lower than those that would actually be encountered if a serious attempt were made to tap geothermal resources on a large scale. I’m dubious that there are that many high grade sites available.
I agree that onshore wind costs seem too low. It seems to me that as a practical matter the costs of any large number of turbines should include the costs of backup generation, pumped storage or some other sort of energy buffer.
I also wonder whether solar costs don’t overestimate capital costs. I have trouble envisioning capital costs that high for PV installations in locations like the Mojave desert playas — no trees to clear, land lease should be cheap?, No need to construct service roads? I prowled around some in the paper and links but couldn’t find much information on exactly how the costs are derived. I imagine it is there somewhere. I suspect that the table that shows minimum and maximum costs is mostly latitude driven.

December 3, 2011 7:06 am

The very first hydroelectric plant was installed in 1868. It is still operational with the original equipment.
So can the figures be reworked to show say 10 years for a wind turbine and 100 years for a hydro scheme.
The results will show a very different picture to that posted. Indeed the new chart should be publicized and the creators of the first bought to book.

R Barker
December 3, 2011 7:07 am

Willis, excellent essay. I agree that some of the numbers for “favored” sources seem optimistic.
I used the EIA figures for actual electricity production for 2010 by source and the installed nameplate capacity for that year to arrive at the following capacity factors.
Solar PV & Thermal 1299 Million kwh 987 Mw installed CF 0.15
Wind 94647 Milliom kwh 39516 Mw installed CF 0.27
If the installed nameplate capacity is for the end of the year, the real CF may be higher. I am assuming that these two sources are always feeding the grid when ever they can. In the meanwhile, much less expensive sources are held in standby or spinning reserve.
I was wondering how the windfarms out West handled the high gusty winds earlier in the week. Anyone know. That might have an impact on estimating maintenance costs.

MrCannuckistan
December 3, 2011 7:09 am

In the emerging Ontario market a 10kW residential grid tied solar system can be fully installed for around $50k. That includes everything. Taking into consideration panel degradation, a system of that size will generate roughly 400,000kWh over the next 40 years. Inverters have 20 and 25 year warranties now too. That puts the capital energy costs around $0.125/kWh instead of the $0.20/kWh shown on the EIA graph. Move that same system to Los Angeles and the system can make up to 50% more energy in the same time. Capital cost/kWh is now down to $0.083/kWh.
Now we are knocking on coal’s door. Rooftop solar provides the most energy during the heat of the day when air conditioners are pushing the grid to its limits and there are no transmission lines to pay for. It would stand to reason that larger systems on stores and factories can bring these numbers even lower with volumes of scale. And let’s not forget, these systems are not designed as a primary source of electricity that requires back-up. They are designed to reduce the use of finite resources such as coal and eliminate the need for peaking capacity.
And yes, I agree we may be in a bit of a glut with respect to solar panel supply. That doesn’t mean we can’t make hay when the sun shines.
MrC

December 3, 2011 7:10 am

Espen says:
December 3, 2011 at 6:35 am
Matthew W: it’s not my idea to call it subsidies: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2ygdsSj.KQI
=================================================================
Quoting someone that is wrong, won’t make it any more right.

December 3, 2011 7:12 am

you says:
December 3, 2011 at 6:25 am
Will-
You pure speculation about wind power, and small easy to maintain generators is a tactlessly bs argument. Just admit wind works.
=============================================================
No one argues that wind doesn’t work.
Wind does blow, that’s what it does.
Trying to convert it into economically feasible energy isn’t what it does well.

Tom Kennedy
December 3, 2011 7:12 am

Willis,
I agree with your comment on wind power. Even leftists/environmentalists (e.g. George Monbiot) in Europe are beginning to despise this “technology”. While in Hawaii (Big Island) last summer on vacation and heading toward the “Green Beach” we noticed that they had installed a new windmill farm on the Southern tip of the island. Next to it was the “old windmill farm” rusting away. To paraphrase Delingpole – the whole place looked like an abandoned War of the Worlds movie set.
DOE is one of the most politically motivated departments in Washington. I’ll bet their figures for life cycle costs are way low. They probably are not accounting for decommissioning – but since it’s an “environmentally friendly’ idea it’s OK if it ruins some of the most beautiful scenery on earth and rots away in the sun.
I’ll send picture of this mess if you want.
Tom Kennedy

Crispin in Waterloo
December 3, 2011 7:14 am

@Willis
“Finally, this doesn’t include the fact that when you add an intermittent source like solar to an electrical grid, you have to add conventional power for backup as well. This is so you will be sure to still have power during the time when the sun doesn’t shine.”
Solar thermal only has to store process heat, not electricity. Also, I am suspicious that the Bechtel installation in S Calif is being used as the ‘cost’ (which is deliberately in the billions). Perhaps we should examine technologies that do not involve Big Green or Big Energy in the same manner that we consider Thorium in the face of opposition from Deliberately Big Uranium.
Solar thermal includes space heating, correct? I am suspicious there is some way to better analyse the need for domestic energy, for example. A lot of domestic energy is thermal and does not need to be electricity between the sun and the applied heat. Jus’ thinkin’…

john
December 3, 2011 7:16 am

Here is wind data for the month of December, 1999 measured at a now developed wind farm in New England. This was measured with calibrated sensors placed at 30 meters and 25 meters AGL. ( I will have to resurrect my old 80286 to provide the 12 months of data I have and apologize that the output is in mph and not metric M/S).
Summary Wind Speed Statistics
Mean Wind Speed: 11.1 mph
SDEV of Wind Speeds: 6.4 mph
Mean Turbulence Intensity: 0.191
Mean Energy Speed: 19.2 mph
SDEV of Energy Distribution: 5.7 mph
Mean Power Density: 156 Watts/m2
Max. 1 hour Wind Speed: 32.9
Assumed Average Air Density: 1.186 kg/m3
Energy Pattern Factor: 2.14
Weibull Shape Factor, k 1.80
Weibull Scale Factor, c 12.5 mph
Speed Data Recovery 99.0
Turbulence Data Recovery 100.0
Direction Data Recovery 92.9
Note: This was one of the better months, the wind speed was recorded below 10 mph for a total of 290 hours. Summer average was about 8 mph.

Catcracking
December 3, 2011 7:20 am

“Good post, Willis. Just one thing: when you complain about solar subsidies, don’t forget that fossil fuels are subsidized as well!”
=====================================================================
“Really??
Can you name those “subsidies”??
Don’t confuse the tax code with “subsidies””
Willis, well said, excellent article. Typically when investigated, the so called subsidies are exactly as you say part of the tax code not the direct subsidies given to solar, wind, and biofuels.
One favorites of Pelosi is the reduction in royalities that was set up during the Clinton Administration to give companies an incentive to drill in deep water offshore in the Gulf when oil prices were low. Royalities are still paid but circa 20 % less. It was a god business deal for both sides at the time and improved for the drillers as oil prices rose. So now many of the tax and spend crowd want to change the contract and threaten those who refuse to comply with blackballing them from biding on new leases. How else can they make renewable energy sources look competitive?
Another item frequently referenced is the accelerated write off of capital expenses to encourage investment and boost the economy that is offered to every other business.
A third item is the foreign tax credits offered to all companies that bring foreign earnings back to the US.
The tax code is by design complex to suit the political machines, and I have limited knowledge in this arena
Keep in mind that with all these “breaks” the fossil fuel business pays huge taxes to the US treasury unlike the renewable fuels. Finally one needs to be aware that after income tax, lease sales and royalities from fossil fuels are the largest source of income to the US Treasury. What is the plan to replace that income source, tax the rich?

Hoser
December 3, 2011 7:22 am

Power production from wind turbines is very dependent on wind speed. Maps of winds in CA at 100m indicate very few places with adequate winds. Wind farms are constructed with one large turbine per 80 acres. That provides 1/3 to 1/2 mile spacing which reduces the risk of fratricide when a turbine fails and throws pieces weighing tons about 1/2 of a mile. 10% of CA electricity needs supplied by wind would require about 2500 square miles of area, considering the capacity factor. This much area with the required sustained winds doesn’t exist on land. Consequently, 10,000 or more turbines would have to be built at sea. Marine wind power costs much more than land-based wind power. That ignores the fact that levelized costs are all lies, skewed for political purposes.
PV solar also requires significant water use to remove dust. Dust reduces power production to a degree (est. 10 to 30%) that washing must be done. The water cost is significant in infrastructure, maintenance, and consumable.
Solar as an individual solution in theory makes sense, but only for people living on their own property. How does an apartment dweller make use of solar in NYC? Opportunity costs of solar and wind are high. Once you build those systems, the land is not very useful for many other purposes. Certainly, humans can’t live there anymore. In the future, people are going to need to live in the third dimension to avoid paving over farmland, forests, and wild places. We will need compact energy sources. Natural gas makes the most sense in the medium term, but nuclear is our solution for the long term. We won’t have any choice if we want to maintain our population.
Who is volunteering to get off the planet? That’s the OWS-socialist fantasy, that someone else will have to die.

Brian H
December 3, 2011 7:25 am

Bob Koss says:
December 3, 2011 at 5:40 am

As that article, and many others documenting the rapid obsolescence, decay, and abandonment of windfarms by “gone with the wind” ‘rupted operators, show, the real maintenance/replacement costs of renewables installations are likely to be disastrously higher than the official estimates. Like maybe an order of magnitude.
One comment I’ve seen a few times from technicians is that it’s actually a rare bird(!) who can work at the heights of the wind-rotors — and the danger is vastly increased in windy conditions. Which–doh!–are the pre-selected norm where windfarms are located.
Solar and windfarms are going to end up as hugely expensive salvage and clean-up operations. The gifts that keep on giving.

barryjo
December 3, 2011 7:25 am

Espen @ 6:35: The article you reference makes the same mistake many others do. It equates subsidies with tax credit. A subsidy is paid to someone to produce more. ie: ethanol, wind energy. A tax credit allows someone to deduct the cost of doing business. ie: mining, drilling, manufacturing.
Wind companies can deduct the cost of the windmill but they then are paid a subsidy for producing the (intermittent) electricity. Big difference.

Gibby
December 3, 2011 7:29 am

Since we are stuck on the cost factor of wind generators right now, I recall reading recently, and had confirmed by my neighbor that works for a major electric utility; that the latest 2Mw wind generators require constant power to spin the motor in shipping and once installed still require power to spin the motor when there is no wind so that the bearings do not prematurely fail in it. So, if true, what does this really mean for the viability of large capacity wind generators.
Also, do you know what happens when one of these generators “accidently” spins backwards?

Wolfgang Flamme
December 3, 2011 7:34 am


https://selvbetjening.preprod.energinet.dk/NR/rdonlyres/9184BC8C-9FF3-48E7-B1A8-42AC9D1F1DB6/0/11WP4SurveyofnewmeasuresbyPES.pdf#page=3
This is from energinet.dk, danish TSO – they must export ~80% of their wind power cheaply to their scandivavian neighbours and need to buy it back expensively when their winds production fails.
Here’s what it looked like in Germany:
http://i171.photobucket.com/albums/u304/wflamme/DE_2006-Stromexport_ueber_Windeinsp.png

Janice
December 3, 2011 7:36 am

There is a hidden subsidy for both solar and wind power, one that could easily be avoided, but never will be because it is not politically expedient. The subsidy is the amount of money it takes to remove solar and wind farms once the parent company abandons them. It usually winds up being public money that is used, since the parent companies usually go bankrupt and are dissolved. It could easily be avoided if the parent companies were forced to post a bond equal to the amount it would take to remove the equipment, and restore the area. And that is a subsidy which coal and oil do not enjoy, because they are forced to remediate their mining and drilling sites.

December 3, 2011 7:43 am

DRIVERS are failing to demonstrate their green credentials after it emerged sales of eco-friendly cars flopped in the first nine months of the year.
Only 8,000 hybrid cars – which run on both petrol and electric – were sold nationally between January and September, less than half the government’s target of 20,000.
Andalucia saw the sale of 885 hybrid cars during that period, representing a 2.4 per cent fall against the same period last year.
Sales of electric cars were also sluggish, with just 17 sold in the whole of Andalucia – 16 in Sevilla and one in Malaga – according to the manufacturers’ association, Anfac.

The group point to a lack of charging points and prohibitive costs, which in some cases are as much as triple the cost of the petrol equivalent, as reasons for the poor uptake.

http://www.theolivepress.es/spain-news/2011/11/27/slow-progress-for-eco-cars/

The one in Malaga is definitely not me 🙂

ferd berple
December 3, 2011 7:52 am

Taking into consideration panel degradation, a system of that size will generate roughly 400,000kWh over the next 40 years.
That is about $40,000 worth of power over 40 years at retail prices, for an investment of $50,000. You are losing $10,000 even before we consider what else you could have done with the $50,000.
Add to this the fact that the system is not likely to last 40 years. More likely 20 years as the panels degrade, which would be only $20,000 worth of power. Which means solar power is able to turn your $50,000 into $20,000 in only 20 years.
Now in Ontario, they have a FIT program that hides this true cost, by paying consumers 5 TIMES the retail market prices for electricity for solar power. So, while a $50,000 investment can return $100,000 over 20 years under FIT – unless a new government cancels the program – $80,000 of that amount comes from everyone else paying taxes.
So, if everyone in Ontario was to do this, then everyone’s taxes in Ontario would have to go up $80,000 over 20 years to pay themselves the $80,000 difference between FIT and market.
However, this won’t happen, because only the rich can afford the $50,000 investment, which means the poor in Ontario are paying the rich to install solar power.

Wolfgang Flamme
December 3, 2011 7:53 am


Mrd is short for the german ‘Milliarde’=1e9 (Billion).
Thus 37,3Mrd kWh =37.3*1e9*1e3 Wh=37.3e12 Wh.
CF(2010) = 37.3e12 Wh / 8760 h / 27214.7e6 W = 0.156.. = ~16%

Doug
December 3, 2011 7:53 am

Espen says:
December 3, 2011 at 3:51 am
Good post, Willis. Just one thing: when you complain about solar subsidies, don’t forget that fossil fuels are subsidized as well!——————-
I keep hearing that from the current administration, but can’t for the life of me figure out what they are referring to.
The own an interest in various wells. I pay tax on every penny which they produce, sometimes tax to federal, state, and county governments. I was able to to deduct initial drilling costs from the income, and deduct an annual depletion allowance of 15%, much in the way one deducts depreciation on a rental property. The difference between depletion and depreciation is that one claims depreciation even if the property appreciates in value, why the reserves in my wells actually do decline every year.
Those deductions are the only “subsidies” I can think of. By comparison, last year one could put solar panels on a house and recover 80% of the cost through subsidies.

December 3, 2011 7:56 am

Hiya Willis and Happy Holidays!
Disagree, disagree… Solar (and wind, for that matter) are not intended to replace other fuel sources, only complement them. Best case scenario is 25%-30%.Within those design specifications for a smart grid, especially solar looks good.
Others have noted that it is not just the module subject to price decreases due to innovation. In addition to inverter and other BOS components, there is the chance to lower prices considerably by reducing the bureaucracy associated with permitting and interconnection.
Another factor to add in when comparing capital costs is (on the good side) we don’t know really how long modules will last, as they refuse to die so far and (on the bad side) inverters really need to improve their lifespans.
Free fuel is compelling, especially to owners of large homes with pools who like A/C in summers. For now, that’s enough of a market to chase. As the price/performance ratio improves, the number of homes for which solar is appropriate will increase.
It’s gonna be okay…

Bernd Felsche
December 3, 2011 8:00 am

I was wrong … the visual scan over the data didn’t pick up periods where data were being collected,, but there was low insolation. Here’s a graph showing the number of maximum consecutive days over the previous 30 days, when insolation was less than one standard deviation below the mean. (The blue line on the graph is meaningless; it only joins the data points so that you don’t go cross-eyed.) I’ve not plotted data for periods during which there were no data.
Even for those without PV panels, solar hot water systems have been popular in Western Australia for well over 30 years because they work well for 8 to 10 months of the year. Solar hot water systems make more sense than PV because their energy is easy to store; and if you don’t have a house-load of teenagers, you may not need to add heat to the hot water that you use even after a spell of 3 to 5 dull days. The energy is stored in the water. Cheap.
Space heating in the Perth metro area is seldom done by solar; not even supplementary. The cost of plant is so much higher than for other heating; unless you’re in a building with central airconditioning and heating. The ROI for even a small supplementary heating system in a domestic residence is negative especially if one includes the cost of plant maintenance (tanks, pumps, blowers, filters and valves).

Espen
December 3, 2011 8:05 am

Matthew, barryjo: I’m not going to insist that it makes sense to call it a subsidy. But in any case it’s an advantage given to a specific industry, isn’t it?

Bernd Felsche
December 3, 2011 8:14 am

Bernie says:
Wolfgang: What is the translation of 37,3 Mrd kWh? I assumed it was a million kWh.

Apologies for busting in… Mrd is short for Milliarden – a Milliard is equal to one thousand million. A term largely ignored by the English-speakers especially those leaning to the USA-version which adopted the term “billion” from the French for the same quantity, before the French went back to “milliard” because the “billion” was a bad idea in retrospect.
USA-ian use of “billion” persisted and its (ab)use has spread along with the financial markets and dealing of the USA. Leading to much confusion. So I habitually avoid the term, referrring to it as thousand-million if I mean that, or million-million if I mean the other. Sometimes, I get lazy and call a milliard a milliard.
Some people think that a milliard is 0.036 inches.:-)

Sal Minella
December 3, 2011 8:17 am

I don’t know about the rest of the world but, here in NY wind and solar are heavily subsidized while so called “fossil” fuels and hydro are heavily taxed.

Tom_R
December 3, 2011 8:18 am

>> Espen says:
December 3, 2011 at 6:35 am
Matthew W: it’s not my idea to call it subsidies: <<
Then you need to look into the details rather than just read the headline of a news release.
1. A large part of the so-called subsidies to 'fossil fuels' is the ability to write off costs incurred in exploration/drilling and taxes and fees paid to foreign countries for the extracted oil. In any other industry these are considered normal tax write-offs as business expenses. Compare that to direct payments of tax dollars (e.g. Solyndra) and higher electrical costs required by the government for solar.
2. Another significant part of the subsidy is the government subsidizing heating fuel for the poor. This savings goes to the fuel companies but is passed on to the user. Compare that with subsidies for home solar installation, electric cars, and other green energy consumer subsidies which go mostly to the wealthy.
3. The real subsidy is measured in money per unit energy. Even if you claimed that business costs should be taxed and that the tax write-offs are therefore a subsidy the 'subsidy' per kilowatt hour are insignificant compared to those for solar and wind.

Rick C
December 3, 2011 8:21 am

Far from subsidizing fossil fuels governments tax them – think gasoline taxes. Every quanity of fossil fuel replaced by subsidized renewable energy must take into account the lost in revenues from taxes and added to the subsidies . In Europe these taxes are enormous. That is why gasoline costs 10 dollars a gallon. In California the state collects almost 3 billion dollars in gas taxes. Can you imagine what a mess California would be in if all cars were electric and subsidized.
California is finding out that increased electricity costs is resulting in what the supporters of cap and trade described as ‘leakage’ – the lost of manufacturing jobs to other states or in the case of solar cell manufacturing – China.

john
December 3, 2011 8:21 am

john says:
December 3, 2011 at 7:16 am
Here is wind data for the month of December, 1999 measured at a now developed wind farm in New England. This was measured with calibrated sensors placed at 30 meters and 25 meters AGL.
Correction with apologies, I had the lower anemometer placed at 15 meters. Should be 30 and 15 meters.
My results are consistent with the expected resource at almost all of the major wind farms located in Maine except for a couple located at the higher elevations in Maine’s western mountains.

ferd berple
December 3, 2011 8:24 am

In Ontario the FIT program solves the problem with solar power not being able to supply power at night or when it is cloudy. The FIT program requires you to have two meters. One that measures solar production, and the other that measures mains consumption. You pay about $.10/kwh for mains power, and are paid about $.50/kwh for solar power.
In other words, the power company will pay you 50 cents for the same thing they sell to you for 10 cents. Question: How much solar power in Ontario is the result of “leakage” from the mains to the PV systems? How many batteries banks backing solar arrays selling power at $.50 are actually being topped up from the mains at $.10 to increase efficiency? So long as you kept this within reason, how could it be detected?
Given the financial incentive, isn’t large scale cheating inevitable?

ferd berple
December 3, 2011 8:28 am

Solar panels with built in inverters would be a fantastic idea. No need for expensive wiring. Simply plug them into any outlet in the house, and as the sun shines, your power meter will slow down. Add enough panels and your meter will run backwards – unless of course you have one of the new smart meters.

December 3, 2011 8:31 am

Willis:
Does wind work as some claim? Have a look at the distribution graphs a the bottom of this page. The other wind sites are mapped as well — see the index. Note the median point — showing that 50% of the time the output is 17% of faceplate or less. Note the mode — the most common output is Zero (0).
http://ontariowindperformance.wordpress.com/2010/09/26/chapter-4-4-7-wolf-island/
Wind power requires 100% backup by another reliable source — as does solar. Unless of course the sun can be made to shine throughout the full 24 hour day — all year long. Maybe in the “New Warmed World” the wind will blow all day — but we are not there yet.
The wind dies out completely from time to time over the entire province of Ontario — see section 3.1 of the site. If people can solve these problems maybe renewables have a chance. Till then…

December 3, 2011 8:35 am

Sunspot says:
December 3, 2011 at 2:16 am

….Denmark boasts that 50% of their generation capacity comes from wind turbines, however they only manage to deliver around 15% to 20% of their capacity. A typical coal fired generator can deliver around 90% of it’s 660mW name plate rating 24/7. You will need around 300 wind turbines to match that name plate rating only, but will never deliver 24/7.

Yes, and Denmark has the highest electricity rates ($0.43 kWh) of all developed nations, of all nations identified in this table: http://www.eia.gov/emeu/international/elecprih.html
Yes, it is tough being green, but that is perfectly alright, as long as it is Joe Sixpack who is paying for it.

Bruce Stewart
December 3, 2011 8:36 am

Many thanks for making us aware of this very useful information.
As an alternative to taking capital cost plus operating cost as the most important figure, one might take the view that the capital cost has less importance the more one thinks in the longer term. Presumably the capital cost is over the lifetime of a power plant, a few decades. On that time scale, we will probably be needing to substitute for large quantities of energy we now derive from oil. Noting that the replacements will need to come from different energy subsectors, and that corporate resistance will continue, society might decide that lack of resilience is a major externality. In this case, it could be instructive to look again only at the operating costs, with the idea that society might be well advised to make an additional investment in the future.
In this light, and if one is skeptical of the operating cost of wind, then the low cost options that can come on line in sufficient quantity are nuclear and solar PV.
I expect Willis will object to this interpretation; just saying that good data are food for many different thoughts.

Catcracking
December 3, 2011 8:48 am

Espen says:
December 3, 2011 at 6:35 am
“Matthew W: it’s not my idea to call it subsidies: http://www.bloomberg.com/apps/news?pid=newsarchive
Several comments. First that is an ancient article covering a period up to 2008. Does anyone have a clue as to how much subsidies to renewables have increase since 2008 under Obama?
Second the Bloomberg article admits that the fossile fuel do not receive subsidies but rather cites tax credits as follows
“The largest of the subsidies for fossil fuels in the report was a tax credit oil and natural gas companies can claim for paying royalties to other governments. The institute’s report finds that credit totaled $15.3 billion over the time period.”
As indicated by others that is part of the tax code available to all industries, not a subsidy of the sort the Administration hands out to Solyndra, etc. Also keep in mind that the large US oil companies earn over 50% of their income from overseas investments/business. Does anyone believe that it would be beneficial for the US to tax foreign income returned to the US without giving some form of credit for foreign taxes paid? No foreign earned income would ever arrive on our shores if that became the tax policy, and many companies might just relocate overseas. Also because of lack of oil/gas investment opportunites in the US due to numerous restrictions the investments in oil/gas are already moving overseas. 10 oil rigs have already left the Gulf due to the administration restrictions post BP spill. Oil rigs are expensive and take time to build so that is lost production for an extended period, lease revenue loss, and royalities that are difficult to replace.
‘From the Article:
“Also included in calculation of subsidies are the U.S. Strategic Petroleum Reserve — an emergency oil stockpile — and the Low-Income Home Energy Assistance Program, which helps some consumers pay for heating and cooling costs. ”
Would any reasonable person count these as subsidies to the oil companies. I thought the Strategic Reserve was created for energy and national defense security, silly me.
Finally to inculde Low income Energy Assistance.. as a subsidy to oil/coal indicates the agenda is to distort the facts rather than provide useful information. Nothing is credible in the Bloomburg article it is pure propaganda.

c1ue
December 3, 2011 8:52 am

I question the wind capital cost numbers: it is very unclear whether the EIA backs out the massive subsidies which every single wind electricity installation receives. If said costs are also modified via feed in tariffs or some other legislation like the California renewable energy mandate, this also distorts ‘true’ cost.

December 3, 2011 8:54 am

A number of comments asserted that fossil fuels are being subsidized, while a good number of responses set those wrong assertions straight.
Some years ago, when the price of gasoline was at about $0.75 a liter in Alberta (and about $2.40 a liter in Portugal), I ran across a study of world-wide gasoline prices at the pump, done by a Calgary consulting firm for the oil industry. Unfortunately, I lost the citation and have not been able to find the report anymore, in spite of intensively searching for it a number of times.
The gist of the study report was that the cost of producing gasoline and moving it from the well-head to the gas tank at the pump, including all production costs and mark-ups at intermediate stages, excluding all royalties and tax revenues, was at that time between $0.23 and $0.26 a liter everywhere in the world. Taxes comprised the difference between that and the price at the pump.

December 3, 2011 9:01 am

Here is a snapshot of the sources of energy generation in Alberta on one of the coldest days in Alberta, last winter:
http://www.bruderheim-rea.ca/mages/Generation_Alberta_2011-03-01_11-20am.jpg
Source: http://lce.folc.ca/2011/03/01/wind-power-generation-on-a-cold-day-in-alberta/
…although of the total Alberta generating capacity a full 5.8% is supposed to be derived from wind turbines, at 11:20 am only 0.022% or 2.2 hundredth of one percent were being generated from wind power.

Crispin in Waterloo
December 3, 2011 9:10 am

@WillR
“Wind power requires 100% backup by another reliable source — as does solar.”
Agreed as logical, however while you can’t store compressed air to blow at the windmill, you can easily store huge amounts of heat to run solar thermal. I have assumed that ‘storage’ is on all cases referring to storage of electricity in chemical or capacitative form. Suppose instead heat is stored and turns the generators 24/7? This is not far-fetched. One should look at the cheapest energy storage point in the total system and place the back-up there. Clearly wind is the worst candidate because it requires distributed on-site storage or perhaps a centralised pumped water storage (as found in Cape Town, for example).

Downdraft
December 3, 2011 9:20 am

Not mentioned by anyone, that I noticed anyway, is the idea of “peak demand availability”. This factors in the availability of the equipment (on-line availability), the occurrence of peak demand (time of day, season), and the likelihood of the equipment actually having a source of power (wind or sun, for example). Here in Idaho, peak demand occurs in mid or late summer, when there is usually little wind, so the peak demand availability of windmill generated power is 5% of nameplate capacity during the time when it could actually do some good. That eliminates windmills as a viable power source, yet subsidized windfarms are being forced on the power company and the costs forced on the consumer and taxpayer in the name of saving the planet (and lining some pockets). Fortunately, we still have some of the lowest power costs in the country due to lots of hydro.
Another topic: I noticed in the cost chart that nuclear is out of position. It was moved lower on the list than it should be. Nuclear is competitive with the latest fossil fuel technologies, has a great safety record, and emits no carcinogens during normal operations.

DirkH
December 3, 2011 9:23 am

Wolfgang Flamme says:
December 3, 2011 at 7:34 am
“Here’s what it looked like in Germany:
http://i171.photobucket.com/albums/u304/wflamme/DE_2006-Stromexport_ueber_Windeinsp.png

Interesting; but that was when we still had all our nukes running…

RWengineer
December 3, 2011 9:27 am

The gentleman that indicates that a $50,000 investment will produce 400,000 kWh over 40 years, for a cost per kWh of $.125 per kWh. I would think you might add at least two items to the cost:
-the cost of the $50K outlay at 5%, would be about $2900 per year over 40 years. That is $116,000 total, or $.29 per kWh
-$.02 for maintenance

MrCannuckistan
December 3, 2011 9:28 am

ferd berple,
Solar modules currently come with 25 year power train warranties that guarantee a minimum performance level. Here in Ontario we have some grid tied panels still in service from the late 70’s. The local conservation area uses them as a showcase of what’s possible. 40 years is not unreasonable. So my figures are subsidy free and dropping with every year longer they last.
The FIT program you talk about is driving the acceptance of solar and is intended to wean the industry off subsidies once the market matures. The slashing of solar subsidies are normal processes, not because they are non-cost effective or whatever, but because they both drive and respond to efficiencies found in the industry. Gotta love public-private partnerships. BTW, the FIT does not solve the problem of lack of solar energy at night. The grid tied nature of the system does that on its own.
Currently Ontario has something like 80MW of small solar projects receiving $0.802/kWh (not $0.50 as you pointed out). That’s roughly 80 million kWh/year costing $64.16 million/year to the rate payers. When you consider that rate payers consume 151TWh/year the cost to the tax payers is an insignificant $0.000000424901/kWh. If the larger projects accounted for a 1000 times greater impact it would still only add $0.000424901/kWh.
And FYI, for FIT projects, batteries are prohibited from being connected upstream of your solar meter. From a technical perspective it’s pretty hard to game this system, although I’m sure some will try.
MrC

December 3, 2011 9:32 am

@Crispin in Waterloo.
I await your economic analysis of the feasibility of Wind/Solar storage. Any study I have seen simply shows that it is far more expensive than conventional energy.
And to show my heart is in the right place I will give you a flying start for one type of renewable storage…
http://www.northlandpower.ca/WhatWeDo/PrerevenueProjects/Project.aspx?projectID=195#m=2
Hint: It does not appear to be economic — I did the calculations for another forum…
As for heat storage you might want to examine the efficiency calculations.
I remain open to the possibilities that will be shown by your analysis… 😉

Steve Oregon
December 3, 2011 9:34 am

SoloPower is getting about $300 million in federal, state and local subsidies to open a new manufacturing plant in Portland Oregon. The local press has been cheerleading the news as a big jobs creator.
But the press wasn’t so kind in San Jose having been jilted in favor of Portland.
I pulled out the best quotes I call 10 red flags=fatal flaw.
My favorite is #5. It’s the bulls eye- The founder accusing the firm’s major investors and board members of “unjust enrichment”. Isn’t that the whole point of these schemes? Never mind viability. Line your pockets while you can.
Someone in some official capacity should be screaming bloody murder. Or at least whispering?
http://www.baycitizen.org/energy/story/solyndra-2nd-solar-energy-scrutinized/1/
After Solyndra, a 2nd Solar Energy Firm Is Scrutinized
San Jose-based SoloPower uses the same risky technology and also received a multimillion-dollar federal loan guarantee
By Aaron Glantz on October 15, 2011 – 12:03 p.m. PDT
1. Three weeks before Solyndra declared bankruptcy, the United States Department of Energy issued a $197 million loan guarantee to another Bay Area solar company that uses the same innovative, but risky, technology.
2. In its six-year existence, SoloPower has experienced internal discord — it paid a $20 million buyout to its founders — and has yet to turn a profit.
3.analysts say it is unclear whether SoloPower’s costs are lower than Solyndra’s. “They have not yet revealed anything on their costs of production,”
4. SoloPower has struggled to increase production to commercially viable levels.
5. Founder Talieh in a lawsuit, accused the firm’s major investors and board members of “breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment.”
6. But Talieh and Basol were bought out for $20 million, and the lawsuit was settled.
7. At the Energy Department in Washington, Damien LaVera, a spokesman, said he had not been concerned by the developments.
8. “This application was approved after extensive review by the career professionals at the department
9. SoloPower is one of four privately held CIGS solar manufacturers based in San Jose. SoloPower and two others have admitted they had never turned a profit. A fourth company refused to say
10. Of the four, SoloPower is the only firm to be granted an Energy Department loan guarantee

December 3, 2011 9:34 am

Doug says:
December 3, 2011 at 7:53 am

Espen says:
December 3, 2011 at 3:51 am
Good post, Willis. Just one thing: when you complain about solar subsidies, don’t forget that fossil fuels are subsidized as well!——————-
I keep hearing that from the current administration, but can’t for the life of me figure out what they are referring to.
The own an interest in various wells. I pay tax on every penny which they produce, sometimes tax to federal, state, and county governments….

No doubt, some people will consider the taxes you pay on oil revenues to be a subsidy. Well, if those are subsidies, then everyone’s job is being subsidized as well, and everything that the governments taxes could be considered to be subsidized.
Aside from that, the German Government actually provided tax incentives for those who installed solar panels on their homes or properties. The return on investment was quite good on that, and the scheme took off, mainly because excess power could be fed back into the grid, and compensation derived from that.
However, not all of the government bureaucrats are stupid. Some of them soon figured out that the scheme was costing the government a lot of money of which it had increasingly no enough. Therefore the government soon began to tax the power delivered into the grid from any PV installations.
Of course, that did not quite cover the costs of installing PV panels and other alternative energy schemes. No problem, the electricity rates were jacked up to more than $0.30 kWh to cover the shortfall.
Perhaps some of our German friends can elaborate on where things stand now. Are the players in the solar craze sill as eager as they once were in both teams to waste their money on a losing proposition?

DirkH
December 3, 2011 9:40 am

Bruce Stewart says:
December 3, 2011 at 8:36 am
“Noting that the replacements will need to come from different energy subsectors, and that corporate resistance will continue, society might decide that lack of resilience is a major externality”
Well, your “corporate resistance” goes both ways; as much as Big Coal doesn’t want to be dismantled, just as much do the wind power people lobby for more subsidies for their sector and fight other energy producers (they finance anti nuclear leaflets, for instance). In Germany, the PV and wind power companies have built up enormous lobbying organisations and their people constantly travel to Brussels to push their agenda on the rest of Europe.
As for the “lack of resilience”, this is the true driving factor behind German governments’ push for renewables. Both types of governments use the CAGW “scientists” only as useful idiots. The real objective is to build up a more diversified energy base to reduce dependency on Russia who deliver most of our natural gas.
These plays will be disrupted by more shale gas discoveries, though…

December 3, 2011 9:48 am

I have used EIA reports off an on for years, these engineers do good work. It is usually so well documented that if you need to make your own adjustments they too will be reliable. Almost all energy sources have their place and utility in the grand scheme of things. It all depends on local conditions and circumstances. Some like solar are very much restricted and some like wind are simply a make work project for the repair people. It seems to me that to do anything other then gas, coal, atomic, hydro are based on non economic criteria.

December 3, 2011 9:49 am

Downdraft says:
December 3, 2011 at 9:20 am
….Another topic: I noticed in the cost chart that nuclear is out of position. It was moved lower on the list than it should be. Nuclear is competitive with the latest fossil fuel technologies, has a great safety record, and emits no carcinogens during normal operations.
Something else needs to be put into the context, that is, for example, the cost of mining in terms of human lives lost. World-wide, about 100,000 men lost their lives mining coal during the last century. I am not aware of any lives lost in the mining of uranium.

Roger Knights
December 3, 2011 9:56 am

mike g says:
December 3, 2011 at 6:33 am
Contrary to the above, it IS extremely likely that gas prices will triple or quadruple if a large-scale shift away from coal to gas occurs.

Your foresight could be worth a fortune! There’s an ETF (Electronically Traded Fund) that tracks the price of natural gal “futures”; I think its ticker symbol is UNG. Leverage up, catch the wave, and then you can lean back and light up that big cigar!

December 3, 2011 9:57 am

One thing Governments and Green Companies don’t want to discuss is the “Human Costs” of Solar and Wind………………….the same old BS rhetoric bubbles to the surface like “Wind and Solar are clean and are replacing the dirty coal and fossil fueled energy systems in the world”. WRONG!!!………….for every single Kw of energy produced by the clean green wind and solar industry one Kw of gas generation is required when the wind doesn’t blow and the sun doesn’t shine!………….the particulates from gas fired generation are smaller than the ones emitted by coal and cannot be “scrubbed” with the latest technology. Asthma sufferers will notice this before anyone else. Clean Coal is a reality but not “politically correct” anymore.
People’s health has been attacked by Wind Sound, and properties have been sadly devalued so that people living within the shadows of these Industrial complexes cannot sell and get the hell out!
Of course the last thing “Greenies” give a damn about are Humans……..they also think there are too many of “us” on “Their” Mother Earth!

Gareth Phillips
December 3, 2011 10:01 am

I must confess that I cannot comment on the economics of PV energy generation, however my own solar powered hot water system was a really good investment. It is not subsidised by anyone else, I don’t export power, but it really made a major difference to my energy bills. Sometimes is easy to overlook how much energy we lose by heating how water and pouring it down the drain. I thought it would take 5 years to pay for itself, it took in fact more like 4. Everything now is clear profit. Renewable energy will never be able to compete with traditional fossil fuels on an economic basis, but it is not that simple. A previous poster commented on the mortality rates for coal mining in the last century. In addition to that were the many others who did not die, but who were severely disabled. The cost of care for such is an issue is rarely included in our calculations. Additional costs of the maintenance of families where the main earner is disabled is also discounted. It may be that such factors increase the economic cost of traditional fuels more than we care to admit.

John F. Hultquist
December 3, 2011 10:02 am

mike g says:
December 3, 2011 at 6:33 am
“ . . . push hydrocarbons and god knows what other chemicals into the water table . . .

Please educate yourself about the fracking issues!
The “water table” is not involved.
Hydrocarbons are the desired output, not input.
Water and sand are the big inputs;
. . . and gaur gum.
You don’t need god to explain this.

kakatoa
December 3, 2011 10:19 am

Willis,
It will be three years from the time that the large RE (pv, concentrating solar, etc) contracts that PG&E, SCE, or San Diego have signed before the details of the contract will be know to the public- which will then allow the public to see what the true costs of purchasing the electrons (generation) will be. We can get a glimpse of the generation costs (which do not include transmission or distribution costs) for contracts that were signed off in 2009 from the following California Public Utilities Commission “ENERGY DIVISION RESOLUTION E-429 dated December 17, 2009” located here-http://docs.cpuc.ca.gov/PUBLISHED/FINAL_RESOLUTION/111386.htm
A key item for say NRG (the folks that have been buying up a lot of the large RE projects in CA) is the Time of Use factor that allow the generator to obtain premium prices for their power at peak times (which is when PV ‘s output hits it maximum capacity factor in both a day cycle and within the year).
“The rates are set and adjusted by Time of Use (TOU) factors as authorized by the Commission. The MPR is the predicted annual average cost of production for a combined-cycle natural gas fired baseload proxy plant. Energy produced during utility peak hours should command a higher price reflecting the higher cost of generation during those hours. Conversely, energy produced during off-peak hours is less valuable to the utility and the tariff should vary accordingly. Using Time of Delivery (TOD) adjustment factors will result in annual payments under this program that better match with the MPR.”
So for PG&E they will be paying NRG a price 2.20490 * the Market Price Referents for the output from the plant in the summer peak months. A PV facility starting up earlier this year with a 25 year contract with PG&E the Market Price Referent = 0.10442. By my math this means NRG will be getting 23.03 cents for each kwh they send to the grid at Super Peak times in the summer. I feel a bit sorry for the poor rate payer advocates at the CPUC as they are going to have to figure out how to allocate these costs to PG&E’s customers.

Doug
December 3, 2011 10:32 am

Here’s an idea:
The standard royalty paid to the government for production of fossil fuels from public land is 12.5% of gross. The system is fair, in that those resources belong to “we the people” and we deserve our cut.
Likewise, the sun and the wind belong to us all. Let’s collect a 12.5% royalty from tapping those sources as well. That would level the playing field and ensure we use the most cost effective source of energy.

Catcracking
December 3, 2011 10:34 am

Several questions comes to mind. If I make any improvements to my house (new AC, etc), the value goes up and so do the real estate taxes, which are considerable in NJ where I live.
If I install solar panels on my roof, do my real estate taxes go up? Shouldn’t that be part of the annual cost?
If not, why not? Are solar panels they exempt? Will they be exempt down the road?
Possibly if I sell the home at a higher price due to solar panels, will the new owner have to pay an increased tax bill, many towns base taxes on purchase price?
One a crazy subsidy scheme is created by the folks in goverment, where does it stop?

December 3, 2011 10:47 am

Feel free to learn from your Northern Neighbors… Canada — if you have heard of it…
http://www.financialpost.com/news/Solar+backers+both+burned/5806751/story.html
There are many lessons to be learned here: 1. Just because something feels good (being green) doesn’t mean you will make any money from it. 2. When there is euphoria on any sector, use extreme caution. Most investors, given the chance of losing 93% for the chance to make 100%, would likely do nothing instead. That’s a great policy when faced with a euphoric sector. 3. Watch out for financings, as usual. Investment bankers strike when the iron is hot and they can sell deals. This in and of itself implies solar stocks were peaking when all the financings and IPOs came out. Basically, it’s the age-old rule. When everyone else is buying, maybe you shouldn’t. 4. Watch out for industries that rely on government support. Far better to invest in a sector that is self-funding without subsidies. The government has enough hidden surprises for you on the personal tax level, so don’t double-up on your government risk by buying companies in need of government help to meet their business plans.
Pay attention to lesson 4.
Cheers!

DirkH
December 3, 2011 10:48 am

Walter H. Schneider says:
December 3, 2011 at 9:34 am
“Perhaps some of our German friends can elaborate on where things stand now. Are the players in the solar craze sill as eager as they once were in both teams to waste their money on a losing proposition?”
Yes. The left parties call the cross subsidy, which increases electricity prices by about 17%, unjust, though, and want a progressive income tax instead to finance the renewable madness. The FDP (classical liberals) is making noises that call for a limit on the new capacity of installations in a year. Guaranteed 20 year tariff for new installations is cut by about 20% each year, following the cost curve of PV.
Still all gung ho for Solar in cloudy Germany.

MrCannuckistan
December 3, 2011 10:50 am

thebiggreenlie,
WRONG!!
For every kWh of energy demand, we can supply that with either a renewable source or fossil/nuclear. While base load nuclear power generation is more of a “light it and go” nature, fossil fuel generation can be modulated. Less use of fossils means less finite fuel consumed, less wear and tear on the equipment and less pollution like SO2, mercury, arsenic, cadmium, lead, selenium and uranium being emitted. (I do not consider CO2 to be a pollutant).
Fossil fuels don’t “back up” renewables. They’d be needed anyway. We just need less of them as renewables are doing a bit of the work.
MrC

MikeEE
December 3, 2011 10:51 am

coldlynx
Would you find the same joy by growing all of your own food, and with growing/producing your own textiles? Perhaps you would enjoy building your own wagon from wood to be pulled by your own horses and grinding your own lenses for glasses. Heck, let’s get totally off the grid and not by pv panels, just burn what biomass you can grow.
Getting off the grid sounds great, but improved efficiency – lower cost (your labor and resources) – comes from larger scales.
Why do you dislike power companies? Rural electrification is still recent enough that some remember the time before – it was not easy. The power provided to all through electricity by these companies enables our civilization to continue to grow at the fantastic rates we’ve seen. I do NOT want to go back to having to survive on what I alone can produce.

Roger Knights
December 3, 2011 11:13 am

Incidentally, here’s a point VMartin made here on Nov. 20:

By the way, there is a related issue which I’ll mention in passing. It is much harder on power plant equipment to ‘load follow’ than it is to be base loaded…..particularly when the load following resembles a yo yo on steroids and this is what happens when gas or coal has to respond to the constant ups and downs of wind. Mechanical equipment simply doesn’t lasts near is long when it run at anything other than constant speed and load. …. The constant fluctuations (temperatures, pressures, speeds, stresses etc) are very hard on it with metal fatigue being one of the most common. It is like comparing how long one’s car lasts with freeway driving as opposed to city driving where there is a stop-start every 200 yards.

Dave Springer
December 3, 2011 11:16 am

If you want the concise condensed version refer to my comment on the most recent DOE comparative electrical generation cost report. This is one my staple documents.
http://wattsupwiththat.com/2011/10/06/wind-turbine-fail-school-left-holding-the-bag-for-53000/#comment-761653
One might also take a look at biomass which is just another way of harvesting solar energy and it’s comparable in cost to advanced coal, wind, and nuclear.
Here’s the table and this picture is worth a thousand words, with far more data, all in one nice spreadsheet format and quite unlike the typically colorful but comparatively empty Figure 1 chosen by Willis.
http://upload.wikimedia.org/wikipedia/commons/a/ad/Levelized_energy_cost_chart_1%2C_2011_DOE_report.gif

Allan MacRae
December 3, 2011 11:28 am

Hi Willis,
As soon as I read the very low alleged costs for wind power I knew they were wrong.
The stated capacity factor of 34% is far too high – low 20’s is routine.
But the Substitution Factor, as indicated by E.On Nets Wind Report 2005 (emailed to you) is the killer. Wind power typically requires more than 90% conventional backup.
Wind power, which varies as the cube (^3) of wind speed, often provides power when it is absolutely worthless, and furthermore can destabilize the grid due to its wild short-term fluctuations.
Finally, if wind power was any good, it would not need huge, life-of-project subsidies.
I expect that we will ultimately conclude that wind power is utterly worthless, and perhaps even generates less valuable, peak-load power than it consumes, on a life-of-project basis.
Regards, Allan
_________________________________________________________________________
Willis Eschenbach says:
December 3, 2011 at 1:40 am
Walter H. Schneider says:
December 3, 2011 at 1:30 am
… Then there is the question of whether the cost estimates for wind power are based on the theoretical maximum capacity rating of the turbines or on the real generating capacity of around 22 – 24 percent of rated generating capacity.
See the underlying document, which is cited at the top. They have figured a capacity factor for wind of 34%. I think a more realistic figure is 25%, which is close to your numbers of 22-24%.
In addition, you are correct that the cost of standby generation need to be included.
If we adjust the wind figures for those, I get:
1. Adjustment for higher maintenance: + 1¢ per kWh, likely more.
2. Adjustment for backup: + 2¢ per kWh plus fuel, call it maybe 3¢ per hour.
3. Proper capacity factor. They have overestimated the capacity factor by about 50%, which will increase costs by about + 6¢.
Together these bring the cost of wind power up from 11¢ per kWh to 20¢ per kWh. I don’t see those numbers dropping a whole lot. Certain locations and installations might be lower than that, but like solar, wind electricity is a long ways from making economic sense.
w.

philincalifornia
December 3, 2011 11:29 am

Here’s a good widget for energy consumption and production:
http://oilprice.com/free-widgets.php

December 3, 2011 11:29 am

I cannot believe that on-land wind is as cheap to build and run as indicated in the chart. Why are there 14,000 defunct turbines in the US? Maintenance is greater than is indicated, broken parts cannot be recycled and are long term pollution.
What is not indicated with wind, on or offshore, is that it functions terribly, only when the wind blows, and even has to be turned off when the wind is too great, at about the speed where the turbines become efficient but the gears cannot take it. Also, wind makes power at inconvenient times and has a number of related health issues to humans and animals.
Turbines in the UK have been paid to turn off when making energy when it is not needed; they make money for doing nothing! There are wind farms in California that have to turn off for 5 months of the year to allow bird migrations.
There is a cost to having all of this investment, either not making wind during the correct times of day, times of year, or not at all, as with the defunct mills. This all raises the cost of on-land wind to the same stupid level as offshore.

Dave Springer
December 3, 2011 11:29 am

Willis Eschenbach says:
December 3, 2011 at 11:14 am

The largest of the subsidies for fossil fuels in the report was a tax credit oil and natural gas companies can claim for paying royalties to other governments. The institute’s report finds that credit totaled $15.3 billion over the time period.

That’s the usual bull that I read. How is it a subsidy that, if a company pays taxes or royalties outside the US, it can deduct them on the US taxes??? That’s just normal tax law, it applies to me as an individual. When I lived in the Solomons, I paid Solomon taxes and deducted them from my US taxes. That is a breakeven deal, I was not “subsidized” in any sense.
=========================================================
Stuck your foot in your mouth again, Willis. Do you know the difference between a tax credit and a tax deduction? Evidently not. Or you didn’t read carefully enough.
Good grief. This is simple tax stuff but like just about everything else it’s way beyond your skill set.

John F. Hultquist
December 3, 2011 11:50 am

Willis says “Try doing it hanging off the top of a hundred foot tower and tell me how easy it is …”
In my neck of the wind swept West — towers are a bit taller, the climb harder, and the sway more noticable.
http://en.wikipedia.org/wiki/Wild_Horse_Wind_Farm
“. . . The towers are 221 feet (67 m) tall, and each rotor is 129 feet (39 m) long, . . .”
I would only add that working on any large structure entails its own work-related issues. The issue is the number of facilities and their ability to be profitable and pay for maintenance and repair. Regarding home systems (aka off grid), many home owners don’t know how to turn the water off entering their homes. Good luck with power systems! Then you have to know how to turn the outgoing power off also, or your system becomes a danger to utility workers during a grid outage/repair event.

December 3, 2011 11:55 am

>>On a totally separate issue, I suspect that the maintenance
>>costs for wind power are underestimated in the report, that in
>>fact they are higher than the EIA folks assume.
I fly over these wind carpets daily, and from my experience, about 15% are out of action at any one time. That is not only a high maintenance cost, but a significant loss of production too….
.

cms
December 3, 2011 11:58 am

Very interesting article Willis. It sparked some good commentary. One thing though, if you consider something occurring in the early 1950’s as being the advent, then I guess Hydraulic Fracturing qualifies. Somehow the idea that fracing is a new phenomena seems to have ingratiated itself into the critique. I know it is a lot scarier if it is new and untried, but it is old and commonplace. I have heard it said that there have been over a million frac jobs in Oklahoma alone since its inception. I think what you mean is shale gas which as an exploited phenomena is relatively recent. I will say that if your intention is to stop shale gas drilling than outlawing fracing would certainly bring it to a screeching halt. I can’t help but think that this is the motivation behind some of the scare stories.

December 3, 2011 11:58 am

Further to my post above, about 15% of wind turbines being out of action. Please note that these are NEW wind-farm installations, less than 5 years old – so it will be interesting to see the situation in 30 years time.
.

December 3, 2011 12:18 pm

Espen says:
December 3, 2011 at 8:05 am
Matthew, barryjo: I’m not going to insist that it makes sense to call it a subsidy. But in any case it’s an advantage given to a specific industry, isn’t it?
===================================================================
It is not at all about “making sense”.
At the risk of being called pedantic, the tax code is not a subsidy.
That’s it. It’s very simple and very clear.

Sal Minella
December 3, 2011 12:25 pm

Willis,
The thing that bugs me the most is that the power company is selling me the same electronsl over,and over again. 3600 times a minute these little charged wave/particles see-saw through the wires of my house.
At least that used to be the case. I have a vague memory that the frequency of my electricity would no longer be closely controlled allowing it wander somewhat about the 60.00 Hz mark.
Two results: Now I get new electrons over time AND many of my appliance clocks are no longer keeping good time.
Cheers

December 3, 2011 12:28 pm

First comment, anyone who uses solar east of the Mississippi and North of the Mason/Dixon is never going to see a payoff on that investment.
I know of nowhere that solar is a “good investment” where there is no subsidy for solar.
I will disagree with this. My company sells mobile solar and solar/wind power systems that are economically attractive today in remote locations and in certain applications in telecommunications, military power, and other areas where the cost of transportation for propane, diesel, or other fossil fuels is prohibitive.
The U.S. military is paying $29 per kw/Hr (yes, twenty nine dollars per kilowatt hour) in Afghanistan.

Espen
December 3, 2011 12:30 pm

Willis, everyone: thanks for clearing this up. I was assuming that the Bloomberg article made at least some sense, e.g. that the tax deductions in question were unique to this industry.

Dr. Everett V. Scott
December 3, 2011 12:30 pm

Matthew W is right. And subsidies only reduce taxes. In the case of oil companies, the taxes paid are substantial. Subsidies only reduce their tax liability by a relatively small amount. And “subsidies” like the oil depletion allowance are no different in principle than depreciation on a commercial building.

Wayne Delbeke
December 3, 2011 12:51 pm

Sal Minella says:
December 3, 2011 at 6:38 am
The problem with small scale local installations of solar panels – i.e. residential installation, is that all other users of the grid pay for it. I live in upstate NY, a place where only a fool would pay the $100K + cost to energize their home with solar or wind yet, many people do. They are told that they can sell excess generation back to the power company.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Yes – that is the kind of cost I found when researching solar years ago, and even though solar prices have fallen, add batteries for emergency power or off grid applications and costs soar.
Add snow, and dirt and clouds and capacity factors and you better not want to run much more than your fridge and deepfreeze. So I have a propane powered 16 kw backup generator as I live in a remote area with wells and a water to water heat pump to run. And I have to clean snow off my solar panels for my fencers and pond aerators regularly. Today it is snowing and overcast so they are all running on battery back up – till the batteries go flat.
Get a dose of reality. The only way Solar panels seem to be “economic” is where there are big federal and local subsidies. Look at the following payback calculation from a PV company for North Carolina. Without subsidies the payback is close to 30 years (at 20 cents a kW) . About the same period as the replacement period for the equipment. Add batteries and a more competitive power rate and PV’s are totally out of the picture.
——————————————————–
Promotion from PV supplier follows:
Details:
2KW (or 2 Kilowatt) is a small starter system that would provide electricity with a value of approximately $45 per month.
This sized system would cost approximately $14,000 before taking advantage of tax credits.
The federal tax credits are 30% or approximately $4,200.
The NC State tax credits are 35% or approximately $4,900.
The bottom line cost, after credits comes to approximately $5,000.
Note: The price of a 2KW system is approximately $7 per watt. As the size of the system increases, the price per watt would decrease. For example, a 5KW system would cost approximately $6 per watt.
The typical 2 KW Photovoltaic (PV) system will include:
10 collector panels of 16 square feet each or 160 square feet of collector panels.
Inverter, wiring, tie-ins, etc., for a complete turn-key installation.
All electric work performed by a NC licensed electrician.
Value / Payback:
Most NC customers sell their solar electricity back to the grid, and get a total of about 20 cents per KWH (Kilowatt Hour).
This represents 5 cents for the electricity, and 15 cents for the “Renewable Energy Credits”.
A 2KW system produces (on average) about 7.5 KWH per day or 225 KWH per month. At 20 cents per KWH this comes to $45 per month, yielding a simple payback of 9.25 years.
NOTE: In North Carolina, payments for “Renewable Energy Credits” come from NC Green Power, and payment rates can vary. Check with NC Greenpower before starting a project to confirm current rates.

December 3, 2011 1:15 pm

I’ve done my own calculations for the cost of solar simply using the published cost a project, then amortizing that number over the expected lifetime of 25 yrs to get a monthly payment. Then I take the kW or MW rating of the solar project and multiply by hours in a month time 15%-20% output. I’ve never calculated a number less than 38 cents per kWhr. And that assumes the average lifespan of a unit is 25 yrs, when in actuality the average lifespan is likely much less.

Bad Manners
December 3, 2011 1:15 pm

Very interesting.
Your post neglected the fact that the levelized cost calculation for GHG producing generators such as coal-fired without CCS includes a capital cost penalty, which has a similar impact to a $15/tonne carbon tax, to provide equivalency to low GHG producing technologies, without this coal-fired power would be cheaper still and the contrast with wind and solar would be even greater.
Following from the DOE document:
“a 3-percentage point increase in the cost of capital is added when evaluating investments in greenhouse gas (GHG) intensive technologies like coal-fired power and coal-to-liquids (CTL) plants without carbon control and sequestration (CCS). While the 3-percentage point adjustment is somewhat arbitrary, in levelized cost terms its impact is similar to that of a $15 per metric ton of carbon dioxide (CO2) emissions fee when investing in a new coal plant without CCS,”

u.k.(us)
December 3, 2011 1:17 pm

Another one bites the dust:
http://www.bloomberg.com/news/2011-12-02/range-fuels-cellulosic-ethanol-plant-fails-as-u-s-pulls-plug.html
“Range Fuels Inc., a cellulosic ethanol company backed by as much as $156 million in U.S. loans and grants from President George W. Bush’s administration, is being forced by the government to liquidate its only factory after failing to produce the fuel.”

Fraxinus
December 3, 2011 1:21 pm

A 30 year life expectancy drastically over estimates the amortized cost of Gas, Coal, Nuclear, and Hydro. If properly maintained, Hydro lasts until something breaks it (like a major flood event destroying the dam). Gas, Coal and Nuclear have many facilities that have been in use for 60+ years already, and despite reference I have seen that large boilers need something close to a rebuild after 30 years hard use, the rest of the facility is already built and the rebuild often increases the capacity of the plant.
Wind is almost uselessly intermittent without some type of high capacity storage. PV while more predictable, has significant times when it produces nothing.
The two most common forms of bio mass are wood chips and methane. American coal plants are designed for crusher run coal, with little to no modification they can burn wood chips only issues are lower burn temp and more ash per KWH. I have seen methane captured by some municipal sewage systems and some power plants get theirs from landfill gas.

December 3, 2011 1:41 pm

Willis writes “So panels are cheap, but not likely to get a lot cheaper in the near future, the market is still correcting. Finally, as I said above, panel costs are a small part of the whole equation.”
What you are seeing there is the base product (ie the cells themselves) have dropped in price but not the whole framing/inverting thing. IMO these too will drop substantially over time once we settle on standardised ways of doing things and there are plenty of installers around to meet demand.
No one renewable will solve all the problems and so we shouldn’t look to use solar for all the answers. IMO nuclear energy will also form a significant part of the solution in the medium term.
The big worry about letting the market purely dictate what energy sources we use is that if/when hubbert kicks in and production falls away with non-renewable like oil, then we’re hit with the double whammy of spending additional resources to convert to another technology during a period where those resources are becoming increasiningly difficult to find.
That, IMO, is the recipe for producing the worst in man.

lrshultis
December 3, 2011 1:41 pm

Willis, why let Coldlynx slide this by,
“That give in Sunny states a annual output of up to 2 kWh electricity.”
An annual output of up to 2 kWh or US $0.30 at high rates, is bad payoff. If he meant 2kW power or2kW per hour averaged over the year, ok but for economics of location for rate of return on investment.

Wolfgang Flamme
December 3, 2011 1:55 pm

Some input from Germany:
This is the Official Wind Power Monitoring Program website, formerly run by ISET Kassel, now part of Fraunhofer Research:
http://windmonitor.iwes.fraunhofer.de/windwebdad/www_reisi_page_new.show_page?page_nr=0&lang=en&owa=&owa_own_header=0
As for costs:
– spinning reserve backup costs are estimated to be around 2.5ct€/kWh_windpower – however no official estimate is available
– neccessary grid enforcements are TSO’s responsibility (big issue right now since grid congestions become increasingly frequent)
– hardship clauses in case of grid congestions (TSO’s emergency management, wind power shedding)
For the city of Hamburg, Vattenfall recently announced a municipal cooperation project where they intend to use wind power generation surplus for district heating assistance…

Nick
December 3, 2011 1:58 pm

Most people in this “Energy sources” debate seem to be missing a simple point.
If the householder spends money on Renewable source? That’s money, now, not wondering the economic system. It’s a diversion of resources to renewables.
Try this for a thought experiment?…
For those that want to install renewables as their main power source? Send extra taxes to the government and have them organise it for you, see how that turns out. Because that is what is actually happening. It’s not ALL about which techinology is or isn’t more viable than the other. It’s also about efficient use of resources.
Most of the western world power generation has now moved to the private sector. Why? because the private sector uses resources more efficiently.
The proposal for renewables requires State involvment. Why?. The private sector wont touch it on any meaningful scale because it’s in-efficient.
OK, so you want renewables? No Problem. Write the government a letter stating you’ll pay extra taxes, or alternativley get them to cut the funding to your Schools, Hospitals, Roads and Infrastructure and see how all that works out for you.

D. J. Hawkins
December 3, 2011 2:01 pm

Dave Springer says:
December 3, 2011 at 11:29 am
Willis Eschenbach says:
December 3, 2011 at 11:14 am
The largest of the subsidies for fossil fuels in the report was a tax credit oil and natural gas companies can claim for paying royalties to other governments. The institute’s report finds that credit totaled $15.3 billion over the time period.
That’s the usual bull that I read. How is it a subsidy that, if a company pays taxes or royalties outside the US, it can deduct them on the US taxes??? That’s just normal tax law, it applies to me as an individual. When I lived in the Solomons, I paid Solomon taxes and deducted them from my US taxes. That is a breakeven deal, I was not “subsidized” in any sense.
=========================================================
Stuck your foot in your mouth again, Willis. Do you know the difference between a tax credit and a tax deduction? Evidently not. Or you didn’t read carefully enough.
Good grief. This is simple tax stuff but like just about everything else it’s way beyond your skill set.

Double foot-in-mouth for you David. Your criticism of a minor confusion of “deduction” and “credit” adds nothing to the topic at hand. Come back when you have something to contribute.

Dr. Everett V. Scott
December 3, 2011 2:06 pm

TimTheToolMan doesn’t seem to have much faith in the free market. As fossil fuel prices rise, alternate energy sources naturally begin to take over as the price becomes competitive. There is no need for government subsidies, in fact such subsidies are harmful to society. Productive funds are diverted to less efficient energy sources, raising energy prices and leaving less money for everything else.
If there were no subsidies for wind and solar power, they would account for almost no energy production. By giving heavy subsidies to the Solyndras of the economy, while absolutely refusing to allow the extraction of the copious new fossil fuel reserves available off shore, the government is fulfilling President-elect Obama’s promise that “electricity costs will necessarily skyrocket.” How is this situation good for the country?

edbarbar
December 3, 2011 2:35 pm

Where does the 1c for Hydro fuel cost come from? I didn’t realize rain and snow cost anything.

Craig Moore
December 3, 2011 2:59 pm

D. J. Hawkins says:
December 3, 2011 at 2:01 pm
Double foot-in-mouth for you David. Your criticism of a minor confusion of “deduction” and “credit” adds nothing to the topic at hand. Come back when you have something to contribute.

Thank you. I too found it a trollish distraction.

theBuckWheat
December 3, 2011 3:04 pm

The self-styled architects of our future energy scold us on the topic of “sustainability”, yet not a single one of their economic plans is sustainable. The most important component is cost and they act as if their good intentions can cause expensive power supplies to be superior to those that are far less expensive.
Well, there are only so many jelly beans in the jar. The family that struggles to pay their $200 electric bill will not be able to pay one when it rises to $500, no matter how clean, sustainable or in harmony with Gaia new power sources may be.
But what is really going on when people who advocated solar power for years suddenly oppose a solar power plant because of how it might disturb a newly discovered endangered species? That they really didn’t yearn for solar power after all. Demands for solar power were really a means to an end- to end our prosperity and national power. And I am afraid this is really the end goal of too many advocates of green power.

harrywr2
December 3, 2011 3:14 pm

Just a couple of notes –
The US EIA uses average costs. Not many people live in a place called ‘average’.
The cost of coal varies by 400% to 500% in the US(The further you are from Gillette,Wyoming the pricier it gets)
Natural gas varies by 50% – the further you are from the Henry Hub the pricier it gets.

john
December 3, 2011 3:26 pm

@ buckwheat.
This is about the associated financial derivatives and has nothing to do with energy. They do not even have to sell electricity. The following is applicable to solar and was brought to my attention awhile back. You might want to take a moment to read the SEC filing.
This is from a company known as First Wind. They have numerous shell and shelf companies including UPC renewables etc. This is from SEC filings to present. (they have not yet gone public).
“Under the terms of our existing financial swaps, we are not obligated to physically deliver or purchase electricity.”( Selling to a foreign country is not mentioned here, so I presume it is mentioned in another SEC Report .)
Amendment 7 to 2010 SEC report
Table of Contents
Risk Factors P.28
Most of the information I have gotten is under Risk Factors of First Wind’s SEC Reports 2010 until the present.
See cohocton wind watch for these filings.
http://www.cohoctonwindwatch.blogspot.com/

bush bunny
December 3, 2011 3:36 pm

At a BBQ last week I found out that a couple had invested $38,000 in solar panels and energy.
They took out a loan! Then said so far they had got back $160.00 for one house that they spent
$12,000 putting in solar. And 1200 dollars for the larger one, that they spent $26,000 dollars.
They are alarmists of course. Now I am wondering, doing our sums, how much will the interest be on those loans? In comparison to what they get back in electricity credits? Solar panels are only guaranteed for five years. And of course they may have taken out a loan for only a few years, but the rest of us, are subsidizing their electricity. Not fair.

john
December 3, 2011 3:49 pm

http://citizenpoweralliance.wordpress.com/industrial-wind-and-the-wall-street-cap-and-trade-fraud/
To illustrate this point the pending First Wind Holdings Inc. SEC S-1 and S-1A application for an IPO readily admits that producing electricity it is not necessary to be profitable.

Jimmy Haigh
December 3, 2011 3:54 pm

Back in my home town of Aberfeldy, in bonny Scotland, they are cutting down all of the trees I planted in the hills to the south of the town 30 years ago to builb a bloody windfarm?!?!?!?!?!
Must be money in it for someone.

Jimmy Haigh
December 3, 2011 3:56 pm

,,,builb…? Hey – no – it’s OK. It works. I’ve made a new verb: “to builb a windfarm”.

bush bunny
December 3, 2011 4:33 pm

Can anyone tell me, that if you have credits from either solar or wind turbines, is it taxable.
Jimmy Haigh at 3.54 pm. Google Newburgh in Fife, Scotland. Of course there are people in it for the money, especially if they own the land the turbines are being built. It will force up the electricity costs for those who don’t own the turbines, as found out in California. While the others are earning subsidies and also credits for themselves. In someways, we are privatising energy
sources and those involved are getting no returns worth the expenditure and input.

MrCannuckistan
December 3, 2011 4:40 pm

My first time using tags so I hope I did this right…

Willis wrote:
The “emerging Ontario market” is supported by an enormous subsidy. You folks are paying 42¢ per kWh to the producers of solar power, Wikipedia sez you are discussing jacking this to 80.2¢ per kWh … and you want to boast about this?

Actually, Wikipedia is out of date. The subsidy has been 80.2¢ for the past two years and now it’s poised to drop in response to private sector competition driving the install costs down over that same period. And yes, I am boasting a 43% drop in installed costs over two years. Keep in mind that without solar, the province would be forced to build peaking capacity for a relatively small number of summer days or import power from another jurisdiction. A plant or transmission corridor that is used 20 or 30 days a year for a few hours each day has got to be expensive per kWh.

Willis wrote:
Costs in their study are levelized over a 30 year period. You need to compare apples to apples.

The cost of ownership over the useful life of the product is a better oranges to oranges comparison. Just because your nuclear plant needs a major overhaul costing billions of dollars at the thirty year mark doesn’t mean you can impose its limitations on my choice of technology. Speaking of costs, the CBO says the average nuclear plant built in America is 207% over budget (table 2-1). Triple!

Willis wrote:
In addition (as you point out) the inverters will likely need replacing.

I think I mentioned inverter warranties, implying that they may not need replacing. In the past four years inverter warranties have increased almost linearly. Now a 25 year warranty is leading the way. My car is warranted for 3-5 years but lasts 10-15 or more. My TV is warranted for a year or two but lasts 10-20. Lastly, there are virtually no O&M costs on a typical residential system so the 2¢ per kWh you allocate for that should cover the new inverter(s) if they are even needed.

Willis wrote:
That’s three times the cost gas at 7¢ per kWh … it only works because of the subsidies.

I did mention that solar was “knocking on coal’s door”, but either way coal or gas are both finite resources that will run out one day. I hope we have a solution ready for when we do. Which leads me to the subsidies you mention. No one says it doesn’t work without the subsidies, yet. As mentioned before, the idea of the subsidies is to give the industry the push it needs to become self sufficient.

Willis wrote:
The problem is you want other people to pay for your hay habit.
Other ratepayers are forced to subsidize your power preference, a preference which doesn’t work without huge inputs of money. This raises the cost of power to everyone, particularly including the poor folks that cannot afford to install a fifty thousand dollar yuppie fantasy. It is a hugely regressive tax. It raises energy costs for everyone, and I think that is a pernicious plan which does not benefit anyone.

You obviously missed my post on the impact to rate payers. The overall impact is insignificant but the long term benefits to society will be profound. When those first, most highly subsidized contracts start to expire we will look back at an industry that will have made huge technological advances that brought them well below the cost of centrally generated fossil fuel electricity.
And since you mentioned it, how about we talk about the insurance subsidy for the nuclear industry. By underwriting the liability of nuclear we, the rate payers, are not having to pay the billions a nuclear plant would have to pass on if they had to carry the appropriate level of liability insurance. Most of the people I talk to say that residential solar panels are covered under your existing homeowner’s policy at no extra cost.
MrC

diogenes
December 3, 2011 5:04 pm

Mr C
Tou write: “Actually, Wikipedia is out of date. The subsidy has been 80.2¢ for the past two years and now it’s poised to drop in response to private sector competition driving the install costs down over that same period. And yes, I am boasting a 43% drop in installed costs over two years. Keep in mind that without solar, the province would be forced to build peaking capacity for a relatively small number of summer days or import power from another jurisdiction. A plant or transmission corridor that is used 20 or 30 days a year for a few hours each day has got to be expensive per kWh.”
isn’t that what your solar power provides….subsidised power for a relatively small number of days. Or else I am completely missing the point of your content-free post

December 3, 2011 5:04 pm

Everett writes “TimTheToolMan doesn’t seem to have much faith in the free market. As fossil fuel prices rise, alternate energy sources naturally begin to take over as the price becomes competitive.”
Thats fine if there is no R&D requred and no long lead times with infrastructural changes. It’d be fine if we were talking about the new iPod or something that is a want and not a need. The fact is there has been massive subsidy into renewal energy sources and we’re still not at the point where we can properly transition to them although we’re a lot closer than if we’d spent nothing to this point.
IMO your opinion of the free market is naive in that the market works well with supply and demand where both are flexible. When demand exists and supply necessarily drops off then there is a bit of a problem. When the only way to overcome that problem is through more supply then you have a problem that can only increase.
And when the supply is of a resource that is necessary for survival then combined with human nature, that becomes a major problem.

old construction worker
December 3, 2011 5:09 pm

“Lawrence Poe says:
December 3, 2011 at 6:28 am
Old Construction Worker says, “This is why the government wants wind and solar. It puts puts more people to work even though it is an inefficient use of capital.”
Sir, I stand corrected. LOL

crosspatch
December 3, 2011 5:26 pm

The overall impact is insignificant but the long term benefits to society will be profound.

I completely disagree with this statement. The complete lifecycle environmental impacts of solar are completely ignored from the mining of the materials required to manufacture them, the building of them, and what are we going to do in 10-20 years time when they all start failing? There is going to be a constant supply of dead solar panels. They can’t be recycled, the cells must be thrown away.
Besides, at best a solar installation provides benefit only during the day. In most of the country they provide little benefit in winter because the sun angle is too low and the days are too short.
You can cheerlead all you want, solar DOES make sense in very isolated locations where mains problem is not available or to provide domestic lighting or some other insignificant use of power but they will never provide power at industrial scale. Neither will windmills. How many windmills does it take to power one single electric arc steel mill 24x7x365? Heck, you can’t power ANYTHING reliably 24x7x365 with wind or with solar without even more environmental impact from such things as batteries for storage in off-peak generation times.
I’m sorry, solar is absolutely no substitute. We have two sources of power for industry: nuclear and fossil and at some point in the next century, we will be down to one, nuclear.
Solar on any significant scale is a pipedream and it always will be except for certain niche applications. It is an absolute waste of money for base power generation. It is not environmentally friendly and it never pays back without a lot of subsidy. Same with wind. It just doesn’t work and there is no possible way for it to work. Anyone who has lived in an area that might be cloudy for weeks at a time can tell you that. The costs are simply not worth the benefit unless you assume that not using conventionally generated power is some sort of benefit and so the entire exercise in large scale wind and solar comes down to convincing one’s self that conventional energy use is somehow “bad”. It isn’t.
Put solar in the desert and it destroys habitat. Put it on rooftops and it is destroyed by hail, wind, etc. Sure, it might work great in Phoenix but it makes a lot less sense in places with more than 200 days of heavy cloud cover per year (Portland, OR; Elkins, WV; Binghamton NY; Kalispell, MT and thousands of other communities). And he is correct, it is a very regressive tax.
I would call for the elimination of all subsidies for wind and solar in order to spur development. Subsidies hamper increases in efficiency by making the current level of efficiency cost competitive so there is no need to improve. But in any case, it is a stupid idea except for corner cases or as a hobby project. It makes no economic sense whatsoever.

bush bunny
December 3, 2011 5:26 pm

Lawrence and Old Construction worker. The facts are these, for every 1 job in new energy supplies, ie. Solar and Wind, has cost 2.2 jobs in conventional energy supplies. Some jobs security?. Wind turbine manufacturers are closing, solar panels are in dire trouble too, and people are losing jobs. It is cheaper to replace a wind turbine than mend it. And solar panels sometimes don’t last the 25 year distance they are supposed to do. After 5 years, you are up for the cost of repairing them. And there again, they are replaced at hire cost, not repaired. They still need back up electricity, those that signed up for subsidies before a certain date, get 60 cents per kwatt or equivalent. Who are the biggest wind turbine and solar panel manufacturers
China!

bush bunny
December 3, 2011 5:29 pm

P.S. The gripe I have is some solar panel customers, say those that complain are not seeing the big picture. We are investing to save the environment and avoid climate change (oh yeah), not the money we get back. Just as well, because the cost will outweigh all environmental benefits,
as they won’t do a thing to change the climate. Dream on solar guardians. Without subsidies
the solar and wind industry will not exist.

kakatoa
December 3, 2011 5:32 pm

Catcracking……….
I am not sure if anyone answered your question (real estate taxes and self generation improvements)-
I live in CA, and in my state the legislature wanted to support self generation so they passed a law that excludes the investment in self generation from real estate taxes. A recent post by Willis showed a graph/table noting that investors in large scale RE projects don’t have to pay real estate taxes on the capital costs for PV (the example may of been concentrating solar).
As an FYI I put my PV system in back in 2006 and it has been very robust output wise- my variation (%CV) in output in the sunny CA summers has been between 2% and 4%. My 6.12 kw system produces 9300 kwh per year (average of 5 years production). The variation in my systems output in the winter months has been a lot larger (17% to 25%) then my experience in the summer. This winter time variation in output is directly related to how much snow I get at my home an how cloudy/rainy the month has been. My system keeps my marginal usage from PG&E to Tier 1 or 2 prices most of the time. For PG&E their current residential prices (e-1 rate schedule- http://www.pge.com/tariffs/electric.shtml ) are- Tier 1= 12.2 cents/kwh, Tier 2= 13.9, Tier 3= 29.3.0 and tier 4 and 5= 33 .3 cents/kwh. Essentially my system offsets what would of been my Tier 3, 4 and 5 usage from PG&E (Tier 5 prices were 50 cents a kwh a few years back by the way).
At the moment the baseline usage quantities (the amount kwh that you can use from PG&E at Tier 1 prices) is set up so that most individuals fall into Tier 3 usage so their marginal costs are 30 cents. Earlier this year PG&E reduced the baseline quantities by 10%.

December 3, 2011 5:39 pm

TTTM says:
“When demand exists and supply necessarily drops off then there is a bit of a problem.”
I agree with that. But in this case the problem is artificially created. There are enormous reserves of coal, and huge reserves of oil under the continental shelf, but the Administration will not even allow exploration, much less extraction in the red zones. Why not?? China is drilling only thirty miles off our coast, partnered with Cuba. The U.S. has the safest drilling record despite occasional accidents. Who are we going to sue, if and when Chinese drilling causes a spill?
The government is distorting the free market to appease the enviro crowd by drastically limiting the available supply, and the result of that bad attitude is becoming disastrous to the average person. The price of a barrel of oil is at least double what it would be if the supply wasn’t artificially limited. The problem is government, not the free market.

Bill DiPuccio
December 3, 2011 5:40 pm

Two years ago I taught a science camp on power generation. I had to be honest with the students after I saw the numbers. I calculated the cost of outfitting my home with a modest array of solar panels. Back of the envelope calculations showed that it would take nearly 50 years to break even without subsidies. Of course by that time part (most?) of the system would also require replacement at additional cost.
Here is the poster I designed to compare the scale of power generation from various sources @ http://scienceetcetera.blogspot.com/p/energy.html
How many solar cells would I need in order to provide all of the electricity that my house needs? See http://tlc.howstuffworks.com/home/question418.htm

MrCannuckistan
December 3, 2011 5:52 pm

diogenes,
Based on your characterization of my post, yes, you are completely missing the point. You must have gone to the socialist school.
Solar power provides a relatively predictable amount of power over the course of a year. If it didn’t, no one would build, buy or finance solar. The peaking/transmission that I mentioned in my above post is primarily built to service the summer air conditioning demand, something that solar can do quite well.
With enough installed solar we can eliminate the peaking plant and also slow our use of finite fossil fuels.
MrC

Jean Parisot
December 3, 2011 6:08 pm

At what point should investment priority be given to improving the efficiency of DC household appliances and energy storage, bringing the total cost for decentralized solar power down. At a glance, using Willis’ numbers it would seem a 10% improvement in compressors and fan performance would make more sense then squeezing panels a bit more. Additionally, a standard for household DC, receptacles, etc. would help.

bush bunny
December 3, 2011 6:11 pm

McCunnackstan, do you believe that millions of years of coal resources will be used up when?
And interesting point though. Hydro electric won’t be used up. Nuclear won’t be either. But I thought that clean or green energy was being encouraged, even if it is more expensive, especially to heat houses in cold weather, to save the planet? Cut down carbon emissions, that are controlling our climate? And then tax it and sell carbon credits so some manufacturers will have to pay to produce electricity, mine, drive cars. Mixed messages here I think. If it works well why change it. If it doesn’t work too well, why invest in a white elephant. If another ice age does come in the next 50 years, we will have to invent heat banks to store warmth, and use gas to
heat our food, or a barbeque type oven.

DirkH
December 3, 2011 6:14 pm

TimTheToolMan says:
December 3, 2011 at 5:04 pm
“IMO your opinion of the free market is naive in that the market works well with supply and demand where both are flexible. When demand exists and supply necessarily drops off then there is a bit of a problem. When the only way to overcome that problem is through more supply then you have a problem that can only increase.”
That’s a straw man. Energy demand is flexible.

Legatus
December 3, 2011 6:24 pm

A few things that have not been mentioned.
Where are most of the solar panels manufactured?
China.
Why not in the US?
Because it is too expensive to make them here.
Why?
Because it takes a lot of power to manufacture these things, and the power in the US is too expensive because we have mandated use of expensive solar power.
China does not mandate solar power, or even much clean power, thus, they can use lots of dirty cheap coal power to make these panels.
If solar were so good, the Chinese would manufacture the panels, then install them in China, then use the power the panels produce to manufacture more panels.
They do not, coal is the only power cheap and available enough to allow them to make these things.
Thus we see that China knows that solar power is no good for actual power generation, only for milking other countries out of money due to mandates and subsidies.
I imagine, now that the subsidies are drying up, that they will stop manufacturing these things, they certainly don’t need them except to sell to rubes like us.
Now that they have milked us dry they will move on to something else.
Second, it takes a lot of power to manufacture solar panels, How many years must that solar panel be around before it makes enough power that there is a net power gain? To really see how good power generation is, you would need to subtract the power it takes to make the generating plant from the amount of power it will produce over it’s lifetime. If one does that, one will see that solar produces a lot less power than we think it does, since it starts off by using a lot of power to even be manufactured. Considering that, just how much actual net, surplus power does solar actually produce anyway? Perhaps the reason we think it produces net, surplus power is only because we have shipped the power costs of making these things overseas were we do not have to use power to make power. If we did, we would probably still be running a net power deficit. What we are really doing here is importing dirty coal power from China, and converting it into solar power. However, we think we are being “green” because we do not have to actually see all that dirty smoke.
Thus, we see that having China manufacture our solar powers has the following effects:
It makes more total pollution worldwide, due to China needing many cheap dirty coal plants to have enough power to make these things.
We lose jobs, due to our more expensive power causing companies to move to China since it is too expensive to manufacture anything here.
When we lose jobs, the tax base goes down, and now we cannot afford the subsidies.
And since it takes a lot of power to manufacture solar panels, we don’t actually gain much net power anyway.

DirkH
December 3, 2011 6:31 pm

Wolfgang Flamme says:
December 3, 2011 at 1:55 pm
“Some input from Germany:
This is the Official Wind Power Monitoring Program website, formerly run by ISET Kassel, now part of Fraunhofer Research:”
Thanks Wolfgang – one diagram is VERY interesting. “Specific investment costs” (EUR/kW of installed nameplate capacity) are EXPLODING – probably the easy terrain is populated now and new installations become more and more expensive as they need to build in more difficult terrain…
http://windmonitor.iwes.fraunhofer.de/windwebdad/www_reisi_page_new.show_page?page_nr=475&lang=en

mike g
December 3, 2011 7:01 pm

@Hultquist
Google Frack aquifer
I’m not normally a greenie weenie but it doesn’t take a rocket scientist to see that these processes are adverse to the environment. Much better to scrape coal off the surface and burn it than to pump chemicals under our acquifers to break the rocks above to free the gas. That is what fracking it.

cgh
December 3, 2011 7:03 pm

Willis, I have a number of serious problems with the numbers and methodology that the EIA is dishing out here. Any competent estimate of costs is given in ranges, not fixed amounts. For example, two hydraulic sites in Ontario, as built without cost of capital. One produces power for approximately 2.5 cents, and the other if built will produce for a minimum of 18 cents even though it could put out at least 10 times as much power as the first. Hydraulic is totally dependent upon site conditions, water volume and head, let alone transmission distance. To give an absolute number is a very bad joke.
The same problem exists for fossil fuels as well. Generation costs will vary enormously with transportation distances. Again, these always have to be done with cost ranges, not absolute values. Just think how expensive it would be getting Powder River coal east of the Appalachians.
Now there’s also a bit of jiggery pokery going on with their wind costs as well. These will be based o.n the wind maps of the US geological survey. I know this because Canada uses essentially the same methodology. These wind estimates in now way reflect the actual capacity factors a wind turbine will produce; the government assessments cause these to be inflated by at least 50 per cent from what will be actually achieved.
You are quite right about maintenance costs being underestimated. The world’s largest off-shore wind fleet at Horn’s Reef has been a nightmare of huge cost overruns and very high outage rates. Salt water tends to eat fragile things like gear boxes and inverters.
Now as to solar, I’m not interested in theoretical calculations. I’m much more interested in actual contract amounts. In the case of Ontario, its electricity ratepayers will be paying 80 cents, that’s EIGHT-ZERO for every kWh of power out of its 1000 MW facility being built by Samsung. And there’s no T&D cost in this, as Hydro One has to forgo the connection charge.
Now as to nuclear, these costs can be inflated easily by the government of the day. Quite simply, a large proportion of nuclear costs are in the hands of government regulators, and they can drive it as high as they like. For example, German utilities collected a plant decommissioning fund. In the late 1990s, the German government levied an asset tax of about 10%, not on earnings but on the entire value of the fund. Decommisioning requirements were not reduced, so the utilities had to pick this up with rate hikes. And the governments of both Britain and the United States have been pilfering decommissioning funds for years and dumping them into general government revenue. Neither of these governments intends to repay nuclear utilities for the funds they have misappropriated, and so all of this will be absorbed as higher generation costs.
Finally there’s a great deal of misinformation about Denmark and its energy supply. If you look at their energy profile they claim that 30 per cent of their generating capacity is in “Renewables”. Then you have to look at what’s included as renewable generation. Yes, there’s wind. But the largest source of renewable generation in Denmark comes from their highly efficient waste incineration systems. Wind is barely over half Denmark’s renewable capacity and much less than 10% of total energy generated. Also, Denmark’s wind fleet is predominantly in Jutland on the west side of its transmission system. This means that primarily its wind supply goes to Germany. Denmark’s coal fired stations have maintained or increased their output every year regardless of wind turbine construction. I’ll say that again for the slow learners in the back; not one single Danish coal fired station has been closed or reduced its output as a result of wind turbine construction.

mike g
December 3, 2011 7:09 pm

@Willis
Contrary to the above, it IS extremely likely that gas prices will triple or quadruple if a large-scale shift away from coal to gas occurs, which is why it is not happening with the present low gas prices.
Not true. If the price of gas goes up like that people won’t use it.
—-
Already happened at least once in the past ten years and they did stop using as much of it. The extra 3 cents/KW fuel adjustment charge from that price bubble has only recently fallen off my bill.

David L. Hagen
December 3, 2011 7:16 pm

Willis
DOE’s SunShot program seeks to fund R&D to cut the costs of solar thermal power from 21 c/kWh to 6.6 c/kWh to be directly competitive with baseload power.
NREL provides SAM Solar Advisory Model to help calculate the efficiencies and costs for solar systems.

cgh
December 3, 2011 7:17 pm

Willis, with respect to your post at 8:48, you are quite right. At $3.50, gas is the cheapest choice, but only now. In 2004-6 it was up around $7-8. This is the problem with gas; its extreme price volatility. And that volatility itself is a cost. During the winter of 2005-6, gas turbine operators in NEPOOL and NYPA were shutting down despite rise in winter demand, because the regulated price of electricity sank below the cost of the fuel. This is a typical feature of the breakup of the vertically integrated utilities in the 1990s, and there’s no getting away from this system vulnerability now.
You are right to point out the vast amounts of gas extractable with new technology. However, by and large we do not know what the extraction costs of this gas will be on a commercial scale. Will it be as cheap as conventional gas? Highly unlikely.
None of the above means that gas is not a highly useful fuel for electricity generation. What it means is that gas can provide supply within specific constraints, and those constraints largely exclude it from base load generation.
The unpleasant fact for far too many energy technology advocates is that every electricity system works best on a very large scale where you have a wide mix of sources supplying the system. Nuclear, coal and hydro for base and intermediate loads, and gas for peaking demand. Solar and wind provide nothing for system reliability on either a regional or a local basis and are only built because of government fiat. If a utility actually had a real choice based purely on economics and reliability, neither of them would ever be built in any quantity however small.

MrCannuckistan
December 3, 2011 7:18 pm

crosspatch wrote:
There is going to be a constant supply of dead solar panels. They can’t be recycled, the cells must be thrown away.

Actually, pv modules are fully recyclable. There are even industries set up to do just that. (See here.)

crosspatch wrote:
Besides, at best a solar installation provides benefit only during the day. In most of the country they provide little benefit in winter because the sun angle is too low and the days are too short.

While it is true that solar only works during the day, in winter they can produce up to 55% of their summer peak. There are also plenty of places in the country have enough sunshine to make solar work. (See here.)

crosspatch wrote:
We have two sources of power for industry: nuclear and fossil and at some point in the next century, we will be down to one, nuclear.

I agree. No one has ever said solar would power industry. No one that I know has ever made that claim. Solar is not base load, not now and probably not ever. Its use has always been for the peak of the day when demand is greatest. The power that industry needs is more available when locally installed solar eases demand on the grid. And I hope the sun is still shining in the next century too.

crosspatch wrote:
Put it on rooftops and it is destroyed by hail, wind, etc.

Solar panels are typically designed to handle a 1” hail stone at terminal velocity and local building codes ensure that panels don’t blow off roofs. Any freak occurrences of bigger hail or stronger winds and you’re probably on the phone to your insurance company already. I’m guessing that’s a reason solar isn’t more popular in the hurricane/tornado belts. We don’t sell a lot of snowmobiles in Miami either.

crosspatch wrote:
Subsidies hamper increases in efficiency by making the current level of efficiency cost competitive so there is no need to improve.

Competition in industry drives the efficiency you talk about. If Company A can do it cheaper than Company B then they get the sale. This drives costs down. With a Feed-in Tariff, the subsidies are re-evaluated periodically to make sure this is happening and align itself with the long term goals of grid parity. As mentioned in a previous post, in the first two years of FIT, Ontario has reduced installed costs by 43%.
MrC

crosspatch
December 3, 2011 7:29 pm

I’m not normally a greenie weenie but it doesn’t take a rocket scientist to see that these processes are adverse to the environment.

To date there is not been one documented problem with fracking and aquifers. That is confirmed by the EPA. Not one. Ever. The fracking goes on thousands of feet below the aquifers.

crosspatch
December 3, 2011 7:35 pm

When they develop solar and wind that can regularly stand up to tennis ball sized hail, we might have something.

Gail Combs
December 3, 2011 7:41 pm

you says:
December 3, 2011 at 6:25 am
Will-
You pure speculation about wind power, and small easy to maintain generators is a tactlessly bs argument. Just admit wind works.
______________________________________
A picture is worth a thousand words:
http://www.gemzies.com/img_photos/fire_in_an_wind_turbine_wind_energy_2_29fe50d390c5ac3bced8a74db4de8dbd_490x350.png
http://www.theresilientearth.com/files/images/german_turbine_fire-der_spiegel.jpg
From Natural News, which is NOT a right wing enclave by any means.

Green’ debacle: Tens of thousands of abandoned wind turbines now litter American landscape
(NaturalNews) Literal beacons of the “green” energy movement, giant wind turbines have been one of the renewable energy sources of choice for the US government, which has spent billions of taxpayer dollars subsidizing their construction and use across the country. But high maintenance costs, high rates of failure, and fluctuating weather conditions that affect energy production render wind turbines expensive and inefficient, which is why more than 14,000 of them have since been abandoned.
Before government subsidies for the giant metals were cut or eliminated in many areas, wind farms were an energy boom business. But in the post-tax subsidy era, the costs of maintaining and operating wind turbines far outweighs the minimal power they generate in many areas, which has left a patchwork of wind turbine graveyards in many of the most popular wind farming areas of the US.
ind sites,” writes Andrew Walden of the American Thinker. “In the best wind spots on earth, over 14,000 turbines were simply abandoned. Spinning, post-industrial junk which generates nothing but bird kills.”
Walden speaks, of course, about the birds, bats, and other air creatures that routinely get tangled in and killed by wind turbine propellers. And as far as the “post-industrial junk” language, well, if it costs too much to run the machines in the first place, then it definitely costs too much to uproot and remove them post-construction.
This whole wind energy mess just further illustrates how the American people have been played by their elected officials who bought into the “global warming” hysteria that spawned the push for wind energy in the first place. And now that the renewable energy tax subsidies are gradually coming to an end in some places, the true financial and economic viability, or lack of wind energy, is on display for the world to see.
“It is all about the tax subsidies,” writes Don Surber of the Charleston Daily Mail…. http://www.naturalnews.com/034234_wind_turbines_abandoned.html

So the big corporate wienies walk away with the $$$ and leave the mess behind to be cleaned up by the land owner or the tax payer.
Windmills were nothing but a wealth transfer mechanism. Transferring dollars from the 99% to the 1% as Occupy Wall Street would say. Too bad they are too blind to see this occurring right under their noses.
Now how about we fines the SOBs for every bat or bird killed and collect some of our money back…. OH that is right no use suing a bankrupt corporation.

kforestcat
December 3, 2011 7:52 pm

Gentlemen
The Advanced Coal with CCS figure looks wildly optimistic. If you look the DOE figures you can see the COE increase for CCS is ilisted as 24% – not the 35% the DOE is officially targeting for future technologies. Placing this in perspective the chart has advanced coal with levelized cost of 109.7 $/Mwh and advance coal with CCS at 136.5 $/Mwh. Calculating… (136.5 – 109.7)/109.7 = a 24% increase in the COE… not the 147 $/Mwh a 35% increase in the COE would produce.
For the official DOE targets see here at:
http://www.fossil.energy.gov/news/techlines/2011/11048-Carbon_Capture_Projects_Selected.html).
It’s also worth noting the DOE’s CCS numbers do not a include the cost of transport, injection, and long term monitoring.
I see another serious problem with the DOE figures. If you look at the capacity factors they have listed for both coal plants and coal plants w/ CCS listed as having 85% factors. I see two major problems with this assumption:
1) A well run base-load coal plant can hit a capacity factor of 90% for the first 20 years of its life. In others words until it’s fully depreciated. A 85% capacity factor is reasonable figure for an older plant with maintenance and dispatch issues. But you wouldn’t make a build decision to build a base-load unit with such a low figure.
2) It is not realistic to assume a CCS system with sensitive downstream Carbon Capture equipment, no CO2 storage capacity, and a need to have continuous flow into a pipeline is going to be capable of maintaining a 85% capacity factor. Hence, the 85% capacity factor the DOE is using for plants with CCS looks wildly optimistic. This is one of a number of major reasons utilities are not prepared to endorse CCS as a commercial technology… just too many unknowns
Bottom line… these are DOE fantasy estimates. Looks to me like the DOE/EPA are proceeding with their current dishonest presentation of CCS as being both commercially available and cheaper than it actually is.
Kforestcat

December 3, 2011 7:59 pm

DirkH says on December 3, 2011 at 6:14 pm
TimTheToolMan says:
December 3, 2011 at 5:04 pm
“IMO your opinion of the free market is naive in that the market works well with supply and demand where both are flexible. When demand exists and supply necessarily drops off then there is a bit of a problem. When the only way to overcome that problem is through more supply then you have a problem that can only increase.”
That’s a straw man. Energy demand is flexible.

When it is 102 degrees F in the shade in Texas?
And it is an hour before dinnertime?
What do you do – just SHUT down a whole society?
Stop living?
Where do you reside anyway – La La land?
.

cgh
December 3, 2011 8:05 pm

Gail, 14,000 wind turbines have been abandoned because government has never placed decommissioning requirements on renewables they way they exist for any other form of generation. If, God help you, you’re a farmer who allowed a bunch of these for rent money on your property, you’re going to be stuck with the abandoned hulks at some time in the future.

crosspatch
December 3, 2011 8:10 pm

Gail, wind does not work. Well, not on a large scale. I might be able to light my house with it if I get the batteries and the charging controller and have enough wind averaged over the day but I have lived in places in the US where we went without a breath of a breeze for a week or more in the middle of a blazing hot summer (mid Atlantic states with a stagnant Bermuda high just sitting there with nearly 100 degree heat and humidity nearly as high). No wind day or night for a week or two.
Wind is fine as a novelty but it can not be relied on for national infrastructure. Unlike conventional power where a major wind or ice storm might take out your distribution for a week or three, a major ice, wind, or hail storm in this case takes out your generation capacity that takes a lot longer to replace and is more expensive. Are we to replace a regions entire generation capacity every time a hurricane or hail storm hits?
That is just dumb.

Gail Combs
December 3, 2011 8:12 pm

Grey lensman says:
December 3, 2011 at 7:06 am
The very first hydroelectric plant was installed in 1868. It is still operational with the original equipment……
_______________________________
Bingo!
I have the feeling the numbers for nuclear are way off too especially if thorium is brought up to commercial use.
Bills in Congress dealing with thorium: http://www.thoriumenergy.com/index.php?option=com_frontpage&Itemid=1
http://www.usrareearths.com/eco/index.php?option=com_content&view=article&id=26&Itemid=56

Toshiba and the Central Research Institute of Electric Power Industry (CRIEPI) are jointly developing a new class of micro size Nuclear Reactors that are designed to power large apartment buildings or small city sections. The new reactor, which is only 20 feet by 6 feet, could change everything for small remote communities, businesses or even a group of neighbors who are fed up with the power companies and want more control over their energy needs.
The 10 MW Toshiba-designed reactor is engineered to be fail-safe and totally automatic and will not overheat. Unlike traditional nuclear reactors the new micro reactor uses no control rods to initiate the reaction. The whole whole process is self sustaining and can last for up to 30 years without refueling, producing electricity for only 5 cents per kilowatt hour, about half the cost of grid energy.
Toshiba expects to commercialize the reactor after the mid 2010’s…. http://peswiki.com/index.php/Directory:Toshiba%27s_Home_Nuclear_Fusion_Reactor

…A private company founded by Kazuo Furukawa, designer of the Fuju reactor, called International Thorium Energy and Molen-Salt Technology Inc (iThEMS) aims to produce a small (10 MW) reactor within five years. Furukawa is aiming for a retail price of 11 US cents per kWh (6.8p per kWh). The Capital of IThEMS is expected to increase to 50 million Japanese yen soon (US$600,000, but they need $300 million to push ahead)….
Development of the micro-mini thorium molten-salt power plant ‘miniFUJI’.
Since smaller thorium molten-salt power plant is easier to construct, we will develop the 10,000kW micro-mini thorium molten-salt power plant ‘miniFUJI’ within five years. This micro-mini power plant is planned as a local power plant to meet the high need of power supply for servers in information industry and for the stations of charging electric vehicles….
http://nextbigfuture.com/2011/02/chinas-thorium-reactor-and-japans.html

U.S. Researcher Preparing Prototype Cars Powered by Heavy-Metal Thorium
By Keith Nuthall Aug 11, 2011 9:21 AM
A U.S. company says it is getting closer to putting prototype electric cars on the road that will be powered by the heavy-metal thorium…..
The key to the system developed by inventor Charles Stevens, CEO and chairman of Connecticut-based Laser Power Systems, is that when silvery metal thorium is heated by an external source, becomes it is so dense its molecules give off considerable heat.
Small blocks of thorium generate heat surges that are configured as a thorium-based laser, Stevens tells Ward’s. These create steam from water within mini-turbines, generating electricity to drive a car.
A 250 KW unit weighing about 500 lbs. (227 kg) would be small and light enough to drop under the hood of a car, he says.
Jim Hedrick, a specialist on industrial minerals – and until last year the U.S. Geological Survey’s senior advisor on rare earths – tells Ward’s the idea is “both plausible and sensible.”….. http://wardsauto.com/ar/thorium_power_car_110811/

December 3, 2011 8:20 pm

Willis Eschenbach says:
December 3, 2011 at 7:29 pm
… Some of us who have been exposed to your “once the market matures” nonsense ever since the 1970s you mention above are understandably doubtful of the market maturing much any time soon.

Somewhere in my archives I have an ad from BC Hydro from the 1980s which, to paraphrase, essentially says to wait about 20 years for the market to mature before they would consider solar panels.
Now we are supposed to wait 20 years for the market to mature, that would put BC Hydro’s original estimate at about 50 years for the market to mature.
I will try to find that BC Hydro ad and scan it and post a link to it. This will either take minutes or months to accomplish as my archives remind me of the warehouse scene at the end of the Indiana Jones movie.

bushbunny
December 3, 2011 9:01 pm

Someone mentioned 102 F in the shade, what about 44 C in the shade (Australia Penrith years ago) at a dog show, some dogs dropped dead from heat exhaustion, and people were jumping into the nearby river fully clothed with their dogs too. Lucky the sharks didn’t come up that far.
Anyone mention Bermuda, lived there couldn’t do without air conditioners in the bedrooms. Humidity plus temps phhewww. Had to keep a covered heater in the walk ins to stop leather mildewing up. Even the sea was warm, like stepping into a tepid bath, or a tropical aquarium. With the little tropical fish swimming around you it was great. I’m no water baby but I could stay in the sea for hours and not get hypothermia, different from Oz and UK.

John F. Hultquist
December 3, 2011 9:16 pm

crosspatch says:
December 3, 2011 at 7:29 pm
“. . . aquifers . . .”

The ‘not normally greenie weenie’ (although he is one today) started with god and the water table. Then returned with rocket scientist and “acquifers” and including “breaking the rocks above” something to free the gas. If I ask what that ‘something’ is, I suppose I’ll hear about brain surgeons and stratigraphy.
Learning is such a slow process. If he ever gets the words and facts straightened out, we can move on to discussion.

B.O.B.
December 3, 2011 9:44 pm

If I understand it correctly, this study leaves room for too many fudge factors and assumptions, which are easily manipulated to sway the final result. For instance, as many have stated, the land-based wind costs don’t pass the “smell test” because the study’s predicted costs are significantly lower than the known costs associated with wind farms that are currently operating. I understand that they’re looking at “new” generation sources, but why not simply use the range of ACTUAL operating and capital costs for plants in each category, as many readers have done in their comments? The apparently understated costs for land-based wind leaves one wondering what other figures may be skewed. This tends to discredit the whole study.

December 3, 2011 10:05 pm

As a EE & MS, having worked in the energy & alternative energy industry (engr., operations & maintenance) for 40 yrs the thought of harnessing wind and PV energy has always attracted me… probably just for the satisfaction of harnessing new technology & initiating the learning curve involved. However each time I get really excited, I redo my homework, due dilligence & cost analysis, and I find that I really can’t breakeven on a 4-5 Kw PV grid-tie system even after 20 yrs…. (Colorado Spgs, CO). I’d really love to put a system in, & I’ve got the perfect place to do so, but I just don’t have the extra $20-$30K hanging around that I can play with and essentially throw away… so to speak.
But having an extensive applied engineering background I always like to look at competitive renewable power supply ideas & proposals to see how practical they are & how well they hold up to realistic economic evaluations.
I recently did a critique of Colorado Springs Utilities Renewable Energy Sources (RES) power generation plans which call for an initial 10% RES utilization eventually graduating to a 20% RES power supply. My comments as listed below cover both wind and PV solar systems in general and identify many of the problems that so many WUWT readers have also noticed and already pointed out.
Resource citation & info: EWEA: European Wind Energy Association, 5-Volume Study: Publication Wind Energy: The Facts, Part 3, Wind Energy Economics
Based on detailed audits and studies of EU community wind farms there are several key areas of concern which I have highlighted below. Each of these needs to be carefully studied and evaluated with detailed sensitivity analysis of each area of concern:
1. Developing a wind farm with the intent of establishing base-loaded power availability is extremely difficult, given the variable nature of wind and the high probability that wind will not be available during peak power usage periods. Research has shown that wind farms only capture about 20-30% of the available wind (kinetic) energy and generate on average about 20-22% of their full load capacity. Therefore to obtain an average of 1 MW of power, one must provide approximately 5 MW of wind generation. At a rough cost of $2.3 MM/MW this turns out to be a very costly proposition. This is what the UK and the rest of the EU are currently realizing.
2. Wind farms (regardless of size) will not reduce the base-load requirement for hydrocarbon based power generation facilities due to the intermittent nature of wind. One can’t simply capture and store the wind or sunlight for use on demand. In contrast, with hydrocarbon based power generation, high density potential energy is readily available for conversion into kinetic energy on demand. This is the reason why conventional power plants are so popular. They are relatively small, easy to build and operate, incredibly practical and will always be required until high density power storage becomes practical and demonstrable.
3. Wind energy (and solar energy for that matter) are often based on a 20-30 year economic life. Conventional multi-fueled hydrocarbon based power generation facilities are based on a 40-60 year economic life. The short economic life of renewable energy sources is especially problematic, since maintenance costs approach replacement costs often before the first 20 years of the life-cycle period.
4. Operation and maintenance costs for wind farms can approach 25 – 30% of the overall power generation costs, especially with intermittent or zero wind flow conditions.
5. Renewal energy sources (RES) such as wind or photo-voltaic (PV-solar) are not necessarily benign to the environment. As research and analysis has shown, substantial quantities of birds are very susceptible to being killed. Videos of these turbine blade bird kills have been displayed on YouTube.
6. From a power security and reliability standpoint, both wind and PV-solar farms are susceptible to damage from severe weather due to natural occurring events such as storms or heavy weather, or from human sabotage. Remote, low density power sites are very susceptible to being rendered useless by either of these possibilities.
7. At the present time, the learning curve for RES (wind) is very steep since design parameters for wind generators, e.g., size, basic construction, blade design, required maintenance and operation are evolving very quickly…similar to the design of early personal computers. Overall costs of turbine towers, generators and maintenance are decreasing as operational experience with existing wind farms increases. The maturing of optimum engineering designs can take 30 years or more. I would caution a quick rush into procuring wind generators based on capital incentives, rather than careful analysis of overall system costs. A more cautious approach would be to set up a pilot plant with only a few generators on an intended wind farm site and then use the operations and maintenance costs, data and experience gained to carefully plan a commercial size facility, if it is economically justified. This avoids the risk of placing all your eggs in one basket. This is common practice for petro-chemical plants utilizing new or non-developed technologies.
8. There is considerable interest in developing RES to reduce CSU’s carbon footprint. This is very noble, but not very cost effective regardless of who, how, what or why it is mandated. It is generally understood that if we were to totally de-industrialize the US economy, it will not measurably reduce the world’s carbon footprint. The world’s engineering and scientific bodies have a considerable amount to learn in order to gain a more intelligent understanding of how CO2 affects our environment. The preponderance of data so far suggests that the world is generally better off in a more CO2 rich environment as opposed to the opposite. I definitely hope for my sake and yours that they don’t outlaw CO2… it could be a fatal decision for all of us.

crosspatch
December 3, 2011 10:11 pm

We don’t NEED thorium. We can use conventional power. PLEASE read “Smarter Use of Nuclear Waste”. You build a facility with two conventional plants and one reprocessing facility. After the initial fuel load, the only thing you ever bring into the facility is natural uranium 238, no enriched uranium ever moves again. No nuclear fuel ever leaves the plant. The waste decays to background in a few hundred years instead of tens of thousands. Yes, it utilizes plutonium, but an isotope of plutonium that isn’t used for weapons. But more importantly, that plutonium never leaves the site. Nothing leaves the site but the fairly short-lived waste. No need for a “yucca mountain”, no need for storage of spent fuel rods. We are being stupid with nuclear power for no good reason.
Wind/solar isn’t the answer when a hail storm or hurricane takes out the entire generation capacity for a region. I have never heard of a nuclear or even a coal power plant being taken out by a hail storm or hurricane. Turkey Point power plant did sustain damage in Andrew with damage to a smokestack and water tank of one of its conventional coal generators. Such a storm would completely wipe out all solar and wind generating capacity. We can NOT strategically rely on wind and solar to provide reliable power in the face of bad weather. We CAN rely on coal and nuclear to do that.

crosspatch
December 3, 2011 10:12 pm

Meant “conventional nuclear power”, not “conventional power”.

Graeme No.3
December 3, 2011 10:12 pm

Willis,
thank you for a very interesting article and to (most of) the contributors for extra information and links.
@ Bill DiPuccio – 50 years to pay off?
I’ve just had solar PV installed here. My calculations are for a return (conservatively) of 6.6% p.a. but that is after subsidies. Without them I estimated 1.1% p.a.
@ Mr.Cannuckistan – solar PV giving 55% of peak in winter?
I checked out my neighbours results and for 2 quarters of the year the amount generated was about 15% of the amount generated. Of course, this was in Adelaide (South Australia) where the sun doesn’t shine as brightly as in Canada sarc now off/.
@ Philip Bradley, Perth – largest wind farm off-line because of mice eating cables – would that be the Albany scheme? When I was visiting it, I noted the high Capacity Factor claimed as likely [41%] and put it down to the ideal siting. Since then I’ve found out that it actually runs around 32%, or less if the mice are hungry. NOTE heroic refraining from gags about Nature.
Our local Sunday paper has a report today on the up-take of solar PV here under the old scheme of 44c per MWh generated (gross amount, not what went back into the grid). The highest % of houses taking this option was on the coast SOUTH of Adelaide in the ‘retirement belt’ at around 39%. obviously the “sea-changers” had funds available. The 13 other suburbs listed are all “mortgage belt” homes. It appears that the common reason was to avoid future electricity price rises, apart of course from greedy bastards like myself. For comparison purposes local costs are 10-11 c (overnight rate) 20-23c (Peak rate 27c) per KWh in daytime, but with rises of 16% p.a. likely.
Not least of the reasons for rising costs is the necessity to up-grade the local parts of the grid because all those solar cells start (& stop) generating at the same time, leading to higher voltages in the lines and at the local sub-stations.
SA also has the highest % of wind capacity installed of any state in Aust. (approx. 20%) which was the boast of our recently departed (and “financially, scientifically, and truthfully challenged”) Premier. The backup costs to that don’t help, as the local CF is 20-25%.
It would be interesting to see a comparison of retail electricity rates versus the percentage of “renewables” installed. My guess is that they both climb together.
Re the difficulties of costing power, I point out that the overnight rate from coal stations is enough to keep the stations running under load ready for the peak demand to come (once the sun comes up). But as a guide to the real cost that figure is a guide.
As is the French price to the UK for nuclear power in their last 4 winters when those thousands of wind turbines weren’t generating. That was 69 euros per MWh or roughly 50c (US) per KWh.
Apologies for the lengthy response, but most of you will read this on Sunday, unless you’re outside maintaining your renewables.

crosspatch
December 3, 2011 10:22 pm

The majority of the land area of the US is subject to hurricanes, tornadoes, blizzards, and hail. Some places are subject to all four. Let me put it this way: if your turbine and solar panels get destroyed, you are going to want the grid power to be there. So … the grid power has to be there to back you up. If we place a significant portion of our power generation into modes that are subject to being wiped out by the weather, that is just plain stupid.

Magzan
December 3, 2011 11:12 pm

“crosspatch: Let me put it this way: if your turbine and solar panels get destroyed, you are going to want the grid power!”
And if your big power plants are destroyed by an earthquake (as recently in Japan) than you are more than happy to have some solar panels on your roof.
BTW I do not believe that solar power will never by competitive for consumers, the prices are falling and with roof-top installations there are no major infrastructure costs. Furthermore as the EIA already pointed out in the past due to growing energy demand worldwide we need all sources, so it is not gas, coal or solar and wind but all of them together if we want to maintain our standard of living.

Wayne Delbeke
December 3, 2011 11:23 pm

kakatoa says:
December 3, 2011 at 5:32 pm
Catcracking……….
I am not sure if anyone answered your question (real estate taxes and self generation improvements)-
I live in CA, and in my state the legislature wanted to support self generation so they passed a law that excludes the investment in self generation from real estate taxes. A recent post by Willis showed a graph/table noting that investors in large scale RE projects don’t have to pay real estate taxes on the capital costs for PV (the example may of been concentrating solar).
As an FYI I put my PV system in back in 2006 and it has been very robust output wise- my variation (%CV) in output in the sunny CA summers has been between 2% and 4%. My 6.12 kw system produces 9300 kwh per year (average of 5 years production).
———————————————————————————————-
Doesn’t look like a very good deal to me. Based on current prices for grid tied systems, your cost would be in the order of $40,000 (ignoring and federal and state cash backs you received.) Interest on that money at 5% per year is $2000. At 20 cents a kW, you don’t even earn enough to pay the interest on the capital. You may as well have invested it in a good dividend stock and used it to pay for the extra electricity. Even at your tier three four and five levels, it takes 23 years using a 5% discount rate and 30 cents a kWhr to get to the break even point, at which time you will be replacing panels and inverters and tie systems, if not before. And how is your system doing in the Santa Ana winds I wonder. Just curious as my panels sure don’t like dirt, rain, clouds or snow. Maybe turning off the air conditioner and opening a window would be the most cost effective. (I have a 3kW gen set on my horse trailer and it barely runs the air conditioning – 3 kW – that’s the equivalent of turning on my electric kettle, my two slice toaster and a couple of light bulbs, the radio and the range hood – anything more and the overload kicks the gen set off. Just so people get and idea of what we are talking about.)
So good for you if you paid less or got cash backs from governments, but I can’t make the numbers work for me without subsidies of some sort. Someone is paying.

Arizona CJ
December 3, 2011 11:43 pm

Thanks, Willis, especially for raising the point of peak load vs. base load, and how solar and wind need backup gen capacity: that is so often forgotten.
I’m a bit more optimistic than you on solar, though not much. It looks to me like the infrastructural costs (costs other than the solar cells) could change, depending in the infrastructure needed for various hypothetical systems. Certain types of mounts don’t cost much, and access roads can be dirt, etc, so I’m hopeful that in the future, the price might be competitive. However, we’re nowhere near there yet, and IMHO subsidies make it less, not more, likely that we’ll get there. I don’t mind subsidizing true research (a very small cost compared to subsidizing generation stations like we’re doing now) but I would like to see the subsidy of production end.
Speaking of solar; one thing I hate are solar garden lights. Sure, free electricity, but they cost many times any savings in battery replacement every year or two, are unreliable, etc. They are great for spots where it’s too hard to run wiring, but nowhere else. I’d much rather take the time to run low-voltage wiring. (plus I get decent lighting that way; the solar ones are so often uselessly weak).

Geckko
December 4, 2011 12:15 am

That is an eye opening piece. Well done. It would support The theory that solar will find its niche in micro applications until there is some revolutionary technical change that sidesteps the economics you highlight.
On wind, the big failing in most analysis is the focus on capacity utilisation. Like solar cell production cots, that isn’t the constraining factor. What matters is the uncertainty. The fact the we really have no idea h

December 4, 2011 12:16 am

DirkH writes “That’s a straw man. Energy demand is flexible.”
Only to a point and thats easy to say whilst there is enough energy around to meet demand. Every single (man made) thing you can see around you has considerable energy input in its manufacture its not just the number of kWh you use in your home every day. More importantly there simply is no viable alternative for oil at all yet.
Yeah people all go on about possibilities like coal fracking and whatnot but the fact is that it takes significant time to get that kind of infrastructure up and running and I would suggest that politically it will be difficult to get moving at all let alone “in time”.

Geckko
December 4, 2011 12:26 am

That is an eye opening piece. Well done. It would support The theory that solar will find its niche in micro applications until there is some revolutionary technical change that sidesteps the economics you highlight.
On wind, the big failing in most analysis is the focus on capacity utilisation. Like solar cell production cots, that isn’t the constraining factor. What matters is the uncertainty. The fact the we really have no idea how much electricity even the most diversified wind grid will actually produce at any instant – starting from zero.
In that way the debate about wind fran yield factors is irrelevant. It makes no difference whether the yield is 25% or 30% or even whether it can be increased to 50%. it matters that whatever the average yield over periods of time, the probability distribution of output at any instant will be little changed, be too concentrated around zero and too unknown. Like the solar option, a game changing, but as yet unknown, technological advance is needed before it makes any economic sense to invest in wind and only subsidy and regulation will encourage it until that happens.

December 4, 2011 1:22 am

I correct myself…When I referred to Fracking coal, I actually meant the Fischer–Tropsch process which essentially turns coal into oil. In theory It could extend our oil supply but will take a monumental effort and significant time to get production to the levels required globally. And an even larger effort politically to make happen.
Even though I dont believe CO2 is the evil that the AGW people believe it is, I do believe we are going down the right path chosing renewables over continued reliance on fossil fuels. Especially distributed small scale solar which IMO is one of the best options forward.

Geoff Sherrington
December 4, 2011 3:12 am

On the opening graph, nuclear (at 11c) is placed below biomass (12c) and advanced coal (12c). Something is wrong.
When I look at the costings we used to review very frequently in the early 1980s, the dominant factor was realley the physics of energy density. This has not changed greatly. Solar panels might have got a few percent more efficient, but that’s a drop in the ocean as you note.
The main deficiency I see in these figures is the huge burden that has been added to nuclear. It’s a synthetic blend that emerged step by step to placate green opposition. There are large social compliance costs, like the cost of site investigation, like pre-paid insurances with huge premiums, like mandatory charges to study waste disposal that have been collected but never utilised into a practical outcome, etc etc.
I’d also note the Moore’s law comment about solar prices dropping and apply it to nuclear technology. The new generation plants should produce more cheaply than the older. They are simpler. Then you need to factor in the longer practical operating lives of nuclear plants, which are not estimates now, but reality.
Taking all this into account, I’d tend to put modern nuclear TRUE costs about where hydro is. Historically, this is where it has been, if artificial social costs are removed, since the 1970s.

December 4, 2011 4:02 am

Scientists have to find ways to solar power viable for everyday use. With the prices of petrol and gasoline at an all time high, not to mention the side effects of these on the environment, alternate fuels sources are the need of the hour.

Perry
December 4, 2011 4:37 am

Rob Goodwin says:
December 3, 2011 at 4:38 am
Goodwin has cognitive dissonance. He is a solar power advisor. His outlook is short term (inal).
From UK elswhere:
On October 31st 2011 the government announced that they will be reducing the feed in tariff by over 50%.
All existing enquiries had to be installed by December 11th to qualify for the feed in tariff at the current rate.
This means that we are no longer able to take anymore enquiries for free solar.
However a paid solar system is still a great investment even with the feed in tariff at the reduced rate. CRETINS
If free solar does return you can still register your details and we will contact you if there are any changes. FAT CHANCE LOSERS!
Please accept our apologies if you are here from any publications that have already been distributed.
http://www.energygrantsdirect.co.uk/solar-pv.html

Bob
December 4, 2011 4:42 am

EIA is skewing coal numbers. Also, it is laughable to believe that CCS can be done for a penny. Every coal plant is going to deepwell CO2, or are we going to build pipelines crisscrossing the US to injection stations? I’m not aware of any real CCS other than heavily subsidized demonstration projects. Anyone who thinks it can be done for just a penny more (per kW) ought to be drug-tested.

Jean Parisot
December 4, 2011 7:03 am

Deepwell CO2? I suspect that bs may be reconsidered.

December 4, 2011 8:32 am

The other point to keep in mind is that the value of wind and solar energy is different.
The value of wind energy is avoided fuel consumption at the balancing plants. Essentially the cost of gas.
The value of solar energy is somewhat higher because the output is more predictable. You don’t have to have as much back-up power for solar plants, so the value is avoided fuel consumption plus some avoided capital costs for other plants.
Also, it should be pointed out that the utility scale solar industry is still finding it’s feet. The biggest plant in the US is 48MW – tiny. So, they still build them basically as a collection of commercial sized plants, with 600VDC collector strings and 500kW inverters. Very little balance of plant optimization has been done.

ChE
December 4, 2011 9:05 am

Shorter version: “free” energy is too expensive if the O&M and capital depreciation is too high. “Too cheap to meter” will never happen because most of the cost of a delivered KWH is in the delivery system. The only theoretical possibility of that ever happening is very localized generation, and there’s nothing fitting that description on the horizon.

crosspatch
December 4, 2011 9:09 am

And if your big power plants are destroyed by an earthquake (as recently in Japan)

Now WHY were the Fukushima plants destroyed? The ONLY reason was because they were an obsolete design that required outside power to dump decay heat after shutdown. Of particular irony was that the explosion at Unit 1 probably resulted in the cascading failure of Unit 2 and Unit 3. Had unit 1 not exploded, chances are good that the other two wouldn’t have either because the explosion of Unit 1 cut the power cables that had just been laid to Units 2 and 3.
Units 5 and 6, being of newer design and being placed higher up, suffered no catastrophic damage. In fact, their power generators were still operating (though not needed in those designs to dump decay heat but those units were not operating).
The ultimate irony is that Unit 1 was slated for final shutdown for dismantling within three weeks of the quake. Had the quake waited two more months to occur, we wouldn’t be having this discussion at all. Unit 1 would have been in cold shutdown already and would not have exploded.
Now the larger point is that if we installed MODERN plants that do NOT require external power and pumps to shed decay heat, we would be immune to the sort of problem that knocked out Fukushima Dai-ichi. It was not the quake but the tsunami that took out that installation by taking out the generators required to run pumps and operate valves. Modern plants do not require generators to run pumps or operate valves for emergency cooling.
Fukushima Dai-Ni, on the other side of town, experienced the same quake but those units were of newer design that also did not require external power to run pumps. Those units had steam turbine pumps that could use its own decay heat to power the pumps. Modern plants don’t even have pumps! They operate on convection, gravity, condensation and evaporation and can remove decay heat passively.
We need to replace the old plants with new ones and build more of them.

crosspatch
December 4, 2011 9:10 am

Modern plants don’t even have pumps!

For emergency cooling that is, the emergency cooling is completely passive.

ChE
December 4, 2011 9:11 am

And one other detail – if solar is cheap enough, a small penetration might be feasible in certain markets because the output coincides with the daily peak, and it’s output is valued at peak prices, which are much higher than average. Not only do you get a premium price for the power, you don’t need storage. Once you get past a certain point though (probably 5-10%), the economics go downhill rapidly.

John F. Hultquist
December 4, 2011 9:25 am

Manoj says:
December 4, 2011 at 4:02 am
. . . alternate fuels sources are the need of the hour.

Maybe the next hour, or the next, or the one after that. This morning it is a bit chilly where I live. I have an all electric house powered by falling water on the nearby Columbia River. That is true of my neighbors, who also burn wood as an alternate fuel. The only thing likely to change in the next ten years is who cuts and carries the wood.
Seriously, study the possibilities for massive alternative energy. What technology can be applied? How fast can it be built? Think materials, workers, land, transmission, among other factors. Would anyone object and file a lawsuit for a project? Even, say, a green wind project?
http://yesvy.blogspot.com/2011/11/wind-in-vermont-way-it-is-today.html
There is historical precedent for a transition from one form of power to another. See:
“The Centrality of the Horse to the Nineteenth-Century American City,”* an article by Joel Tarr and Clay McShane explaining the serious environmental hazards horses presented when used in large numbers and how that related to the emergence of the automobile.
http://www.enviroliteracy.org/article.php/578.html
Still, these things take time.

crosspatch
December 4, 2011 9:41 am

Put in a different light: “environmentalists” are making it much MORE likely we will experience a disaster like that in Japan by inhibiting the replacement of old plants of 1960’s/1970’s design with new plants of more modern design. A modern plant could weather an earthquake such as we experience in California (a “strike/slip” quake of up to about M8). By delaying the construction of modern plants, they are causing older plants subject to the same sort of failure as the Fukushima plants to operate longer. All nuclear plants are not the same. Modern plants such as the GE ESBWR and the Westinghouse AP1000 are not only safer, the are simpler to build and maintain. Most of the cost in building and operating nuclear plants is due to external costs imposed by regulations that are not directly related to how much it costs to actually generate power. One example is spent fuel. We are not allowed to reprocess it into new fuel (typically a fuel rod is “spent” when only 5% of the energy potential of the fuel is expended leaving 95% that could be reprocessed and used). Not only are we not allowed to reprocess them, we aren’t allowed to dispose of them either so we end up with massive amounts of spent fuel that must be guarded. It is stupid!
Sometimes I believe that we have become a nation of emotionally driven idiots.

Wolfgang Flamme
December 4, 2011 10:33 am

Germany’s ahead for some more trouble w/ renewables. According to the Handelsblatt (in German) Poland is about to repel german renewable’s export in order to protect their power plants from ramping down – forcing us germans to eat our own dog food.
Of course they won’t do that. They want compensation. I can’t blame them.

Resourceguy
December 4, 2011 10:42 am

First of all the nuclear cost figure is pure fantasy. It might be that low after you force the captive rate payers to eat the cost overruns! The solar pv cost figure is also fantasy because we still let analysts get away with inflated industry averages that are falling fast and includes the costs from wannabe startups with Federal loan garauntees and no future. In short, misguided statistics equates to more lost time on rational energy policy choice.

TRM
December 4, 2011 11:46 am

As usual some very interesting reading at WUWT. This article and the comments are good food for thought. Natural gas FTW as expected by anyone who’s followed the industry and knows the massive amounts now available to us. When even nuclear and coal are more expensive you know the game is up for the rest.
I was surprised by the entry for wind at 10 cents. That is close to competitive but first we need to solve a few problems like storage of massive amounts of DC electricity cheaply. Without that no intermittent source is practical on a large scale. If you can get rid of the requirement for base load energy as backup you can make a much better case for wind/solar etc. If you can’t? Well you are sunk.
It is very similar to your house. Solar and for that matter wind, micro hydro etc really only make sense when you go off grid completely. The reason for that is all the other charges on your bill. In my case a full 2/3rds of my gas, water & electric is not consumption based. To pay back solar would take forever unless I would disconnect and save that 66% of my bill. That costs a lot more up front because now you are looking at serious amounts of storage for electricity.
I’m also amazed at how much emphasis is placed on big projects. Yes there are advantages to scaling but like Willis has pointed out there are a lot of other costs. So when they build roof tiles with solar built in that will be a major advantage because you are going to get the roof tiles installed anyway.
Think about heating and cooling for a minute. Rather than something high tech and complex how about something simple? Bury 1000 feet of 6″ tubing ten feet underground and use that to heat and cool your house (and greenhouse). Insulate well and have a wood stove for the occasional cold spell.
http://citrusinthesnow.com/
I would love to see some serious investigation about that approach.

Sunspot
December 4, 2011 12:28 pm

I spent most of summer in Denmark and Germany and hardly saw the sun. The best place for solar panels in these regions is inside the barn so as they don’t get dirty and you can shine lights on the panels to generate electricity.
Australia is probably one of the best countries for solar panels but the unit cost for a kWH would need to more than triple to make solar panels and wind turbines viable. Our federal government here in Oz us tell us in one of their brochures that once sufficient solar panels and wind farms are up and running coal fired power stations can be decommissioned.The availability rating for electricity generated from coal fired power stations is currently around 99.95%. I dread to think what that rating would fall to if we disconnected all coal fired generators.

Gail Combs
December 4, 2011 12:51 pm

crosspatch says:
December 3, 2011 at 8:10 pm
Gail, wind does not work. Well, not on a large scale…..
_________________
It has always been a scam.
I looked into it a while ago. Wind might work small scale if you live on a windy ridge (I do) and can use it to pump water between two ponds with a hydro-generator between them. Otherwise they only make sense for pumping water into livestock tanks in remote locations or grinding grain in third world countries.
The big problem with all of it is the town zoning laws. A large corporation can do what a home owner can not. Which is probably lucky or we would have small scale bird shredders littering the landscape.

Gail Combs
December 4, 2011 1:12 pm

TRM says:
December 4, 2011 at 11:46 am
….Think about heating and cooling for a minute. Rather than something high tech and complex how about something simple? Bury 1000 feet of 6″ tubing ten feet underground and use that to heat and cool your house (and greenhouse). Insulate well and have a wood stove for the occasional cold spell…..
________________________________________
I also look into this one too. These people seem to have done the engineering: http://mb-soft.com/solar/saving.html
I talked to a guy yesterday who sells small heaters. He knows of two houses in my area with the buried pipe heating/cooling system.
Now if I could only convince my Community College to use my house as a demo project. Windmill with a two pond hydro power unit for self contained electric and the geo-thermal for the heating/cooling maybe I could get a grant…… (snicker)

kakatoa
December 4, 2011 1:23 pm

Willis,
The folks in Marin are a bit unhappy with how PG&E is allocating it’s cost to provide service- “Marin Clean Energy officials, as well as representatives from the San Joaquin agency and San Francisco, have repeatedly asked the California Public Utilities Commission (CPUC) to rein in PG&E as the company has used a scatter-shot approach to stall public-power efforts.” as noted here- http://www.pacificsun.com/news/show_story.php?id=2486 : “PG&E charges ahead -Is utility manipulating rates to undercut Marin Clean Energy?”
They are likely upset about how much PG&E is allocating to transmission and distribution- “Charges for your electric service include both generation (electricity) and transmission & distribution (delivery of electricity) components. PG&E’s transmission & distribution rates are applicable to all customers. PG&E’s generation rate is not applicable to customers who do not receive their generation from PG&E, such as CCA customers or Direct Access customers. Generation rates for these customers are determined by their energy service provider, although PG&E may also include PCIA and FFS charges to reflect the full cost of your generation services. See definitions below and on Page 2 of your bill.” . This quote is from http://www.pge.com/includes/docs/pdfs/mybusiness/customerservice/energychoice/communitychoiceaggregation/faq/PGE%20Business%20Non-Gen%20Rates.pdf
The non-generation part of the A-1 (business) rate is 65% of the costs of a delivered kwh. This percentage is similar the allocated costs, per my yearly true up bill from PG&E, which was 36% for generation for 2009 and 2010- my allocation for generation droped to 25% last year. My allocation for public purpose programs jumped last year to 24% of my yearly bill (vs 16% the year before).
The unbundeled rates for residential (e-1 rate schedule) is delineated here- http://www.pge.com/tariffs/tm2/pdf/ELEC_SCHEDS_E-1.pdf It’s been many a year since my cost accounting days, but the breakdown in the costs noted in the schedule don’t seen to have any relation to the actual cost to deliver electrons to end users. Your thoughts on the allocations would be more then welcome………..

Dave Springer
December 4, 2011 1:28 pm

TRM says:
December 4, 2011 at 11:46 am
“As usual some very interesting reading at WUWT. This article and the comments are good food for thought. Natural gas FTW as expected by anyone who’s followed the industry and knows the massive amounts now available to us. When even nuclear and coal are more expensive you know the game is up for the rest.”
Electrical generation is not a great concern for the United States. Transportation fuel is the problem. We could end the recession in the U.S. by easing the price burdens on energy production which is exactly what Rick Perry intended to work towards if elected president.
“I was surprised by the entry for wind at 10 cents.”
You would be if you believed most of the authors on this website who have a knee-jerk ideological opposition to anything and everything that is favored by the evil environmentalists. Like most things in life moderation is the key. Wind energy is no panacea but carefully managed in suitable locations it can comprise perhaps 10% of electrical generation at competitive prices.
“That is close to competitive but first we need to solve a few problems like storage of massive amounts of DC electricity cheaply.”
Either that or get better at predicting demand and production. That’s essentially saying we need better weather predictions. Better wind predictions so we know how much wind power is available at any given time and better temperature predictions so we know how much heating/cooling demand there will be. Given adequate information you can schedule adequate spinning reserves in a cost effective manner.
“Without that no intermittent source is practical on a large scale.”
Certainly not as a sole source but I’d have to say with over 10 gigawatts of nameplate capacity wind energy is already large scale in Texas and still growing.
” If you can get rid of the requirement for base load energy as backup you can make a much better case for wind/solar etc.”
A better case, yes.
“If you can’t? Well you are sunk.”
No you aren’t “sunk”. You have more constraints.
“It is very similar to your house. Solar and for that matter wind, micro hydro etc really only make sense when you go off grid completely.”
I found the complete opposite. Batteries are over half of the total cost of an independent system! Solar PV would be cost-effective for me (owner-install) at half the current price of grid-tie electronics and solar panels. It becomes far more difficult if I’ve got to maintain a huge battery bank to supply juice during nights and cloudy days. Prohibitively so. With a grid tie I can, on most days, do all my heating and cooling while the sun is shining and any nightime or cloudy day usage I can draw from the grid. Simply heat or cool thermal mass during the day and use that to keep the temperature constant during the night.
I already leverage thermal mass to a large extent using earth-berm but I have an advantage in that the year-round temperature a meter or more underground in my location is 72F which is perfect. I excavated a chunk or north facing hillside with only one long wall and the roof not backed by earth. Very little energy is needed for heating or cooling. The inside temperature absent any heating or cooling changes very little from one day to the next and the closer the average daily temperature is to year-round temperature the less change there is inside.
“The reason for that is all the other charges on your bill. In my case a full 2/3rds of my gas, water & electric is not consumption based.”
I have a water well, septic system, and propane tank at my primary residence so there are no non-consumption charges in those. Non-consumption electric charge is only 20% of my bill on average not 66% as in your case. You either use very little electricity or your electric company is taking you to the cleaners for service availability charge. Mine’s bad but it’s still only $22/mo.
“To pay back solar would take forever unless I would disconnect and save that 66% of my bill. That costs a lot more up front because now you are looking at serious amounts of storage for electricity.”
If I could generate electricity at half the cost of current photovoltaic cost/efficiency and I could sell it at retail price I could make a living at it. Unfortunately my electric company sells to me at retail price and buys back from me at wholesale price if I generate more than I consume. Given that every kWh I don’t purchase from the grid I save full retail price then with modest cost/improvement in PV panels it would be worthwhile to at least produce as much as I consume.
“So when they build roof tiles with solar built in that will be a major advantage because you are going to get the roof tiles installed anyway.”
Solid state electronics have a history of rapid price declines. PV seems to be a bit of an exception and grid-tie electronics are ridiculous in price. Economy of scale can probably drop current prices in half.
“Think about heating and cooling for a minute. Rather than something high tech and complex how about something simple? Bury 1000 feet of 6″ tubing ten feet underground and use that to heat and cool your house (and greenhouse). Insulate well and have a wood stove for the occasional cold spell.”
That’s essentially what I do but it only works in locations where average year-round temperature is in the same ballpark as room temperature (72F). Where I grew up it’s 52F which makes it much less effective.

Dave Springer
December 4, 2011 1:43 pm

David L. Hagen says:
December 3, 2011 at 7:16 pm

“Willis
DOE’s SunShot program seeks to fund R&D to cut the costs of solar thermal power from 21 c/kWh to 6.6 c/kWh to be directly competitive with baseload power.
NREL provides SAM Solar Advisory Model to help calculate the efficiencies and costs for solar systems.

I’m sure Willis has “moved beyond” this which essentially means he’s convinced he’s right and contrary evidence is therefore not worth his time to consider. Willis practices dogma not science.
That said, even if solar can be competitive with natural gas, that doesn’t really solve any problems unless one considers CO2 from fossil fuel combustion to be a problem. A far as I can determine CO2 is a benefit not a problem. We need CHEAPER sources of energy to make progress. A same-price replacement is worth nothing AFAIC.

Colin Megson
December 4, 2011 1:59 pm

You can run by a design for a Liquid Fluoride Thorium Reactor (LFTR) and know it won’t be half the price of a Gen III Pressurised Water Reactor(PWR), which are the ones being planned for and built at the moment – that takes it to, say, 5cents. Also the thorium fuel costs, operation and maintenace will be half that of PWRs – 2 cents. All in all LFTRs will be as cheap or cheaper than CCGTs (and they can load follow as well). See the heading to this blog to get an instant perspective on the environmental effects of obtaining our energy from: Coal – Uranium – Thorium: http://lftrsuk.blogspot.com/

December 4, 2011 2:56 pm

Manoj says December 4, 2011 at 4:02 am
Scientists have to find ways to solar power viable for everyday use.

Yes; God forbid you should look to ‘dropouts’ like Wozniac, Jobs, Gates, Dell or a Henry Ford to find reasonable market-workable solutions (read that as: economically viable and producible).
ALWAYS look to your ivory-towered, pointy-headed academics to ‘solve’ your problems (ISN’T that what got us into this mass in the first place?)
/Not even sarc
.

Spector
December 4, 2011 4:20 pm

RE: Dave Springer: (December 4, 2011 at 1:43 pm)
“We need CHEAPER sources of energy to make progress. A same-price replacement is worth nothing AFAIC.”
On the assumption that economically recoverable geo-carbon energy is being exhausted, a same-price replacement is better than a high-cost replacement.

Claude Harvey
December 4, 2011 4:25 pm

Bravo, Willis! You’ve captured the essence of why solar is a hopeless cause. The bottom line is a pathetic energy density that precludes the technology’s ever achieving “economy of scale”. There is simply too much physical material required to produce too little power at a horrible capacity factor. Wind power is afflicted, to a less extreme degree, with the same problem.
I’ve only a three of things to add. First, I think the levelized figures for solar are, in reality, considerably higher than those shown in the chart. Second, the levelized costs of CCGT (natural gas turbines) are dominated by projected escalation of future natural gas prices. I’m betting those prices will be less that projected in the U.S. because we are bursting at the seems with newly proven natural gas reserves. At today’s natural gas price, CCGT pencils out at under 4-cents. Third, wind industry experience in the U.S. indicates that O&M costs are much higher than those shown in the chart. So many moving parts for so little power is eating their lunch in maintenance expenses.

December 4, 2011 6:10 pm

Willis writes “Didn’t I just go through and show that “distributed small scale solar” is about three times the price of grid power? Didn’t I just show solar is very unlikely to ever be less than about 12¢ per kWh no matter how cheap the panels get?”
Yes, Willis, you did say those things. Based on an analysis in today’s environment. But IMO you’re showing a surprising lack of vision on this matter. Nothing comes close to fossil fuels for energy density (except nuclear and location specific hydro and geothermal perhaps) so what are you saying we should do? Stick with fossil fuels because they’re the most economical?

Spector
December 4, 2011 6:24 pm

Here is a recent video of a talk given by Dr. David LeBlanc on the design of thorium-based nuclear reactors with low potential energy cost. As far as I know, thorium-nuclear is the only energy resource that can meet our current needs indefinitely.
David LeBlanc – Potential of Thorium Fueled Molten Salt Reactors @ TEAC3
“Dr. David LeBlanc explores the diversity of Thorium Fueled Molten Salt Reactor design options, and their rational and value.
“Presented at the 3rd Thorium Energy Alliance Conference, in Washington DC.”

Uploaded by gordonmcdowell on Nov 27, 2011
12 likes, 0 dislikes; 222 views; 20:13 min

As a point of balance, here is a reference to a web article that is critical of the Molten Salt Reactor concept. The writer characterizes the supporters of ‘Energy from Thorium’ as a ‘Cargo Cult.’ I would hope that the problems raised by this writer prove to be false, illusory, or soluble.
daryanenergyblog
A critical analysis of current and proposed future nuclear reactors designs
Part 8 – The Molten Salt Reactor concept
http://daryanenergyblog.wordpress.com/ca/part-8-msr-lftr/

December 4, 2011 11:01 pm

Willis writes “Yes, of course we should stick to fossil, until we find something more economical. Are you saying we should switch to other fuels because the other fuels are uneconomical?”
No, I’m saying we should switch to other fuels *despite* them being uneconomical by today’s standards and *because* peak oil is a certainty. One way or another we’re going to be transitioning away from oil and I’d prefer the significant related expenses and efforts were directed towards renewables rather than increasingly ramping up our mining and processing of coal.

Claude Harvey
December 4, 2011 11:50 pm

Re:TimTheToolMan says:
December 4, 2011 at 11:01 pm
“No, I’m saying we should switch to other fuels *despite* them being uneconomical by today’s standards and *because* peak oil is a certainty. One way or another we’re going to be transitioning away from oil and I’d prefer the significant related expenses and efforts were directed towards renewables rather than increasingly ramping up our mining and processing of coal.”
If you simply let market economics decide when a better alternative to fossil fuels is “ripe”, you avoid all that unnecessary pain in your wallet at tax time and unnecessary pain in your butt that premature adoption of the bicycle commute will engender. I’m in favor of a “first adopter” mentality, so long as I’m not forced into paying the freight for your farsightedness.

December 5, 2011 12:46 am

Claude writes “If you simply let market economics decide when a better alternative to fossil fuels is “ripe”,”
Market forces will be driving it all along the way, but market forces alone mean the path of least resistance and that isn’t necessarily the best for long term goals. There is certainly a role for subsidy and regulation to get things done that are in the best interests of everyone and not just those doing the driving.
Take fishing as an example, if it weren’t for regulation and society self imposed responsibility, we’d probably have essentially fished out the oceans by now.

December 5, 2011 1:10 am

Willis writes “We are currently transitioning away from coal and towards natural gas without direction.”
And thats a good move as far as I’m concerned, but not a sustainable one. So all the effort and costs we pay for transitioning towards natural gas will ultimately need to be made again when we transition away from it. And meanwhile, looking at your picture, the price is mostly related to the gas itself and thats only going to increase.
I like PV solar because the more of it that is out there, the lower the overall running cost. The cost is born up front and whilst you may not immediately see the benefit of that, I certainly can. Society as a whole doesn’t share my point of view because we’re living very much in a “I want it now” society.

Spector
December 5, 2011 2:59 am

Re:TimTheToolMan: (December 4, 2011 at 11:01 pm)
“One way or another we’re going to be transitioning away from oil and I’d prefer the significant related expenses and efforts were directed towards renewables rather than increasingly ramping up our mining and processing of coal.”
I will agree that we should be looking to find a replacement energy resource as the limited stores of economically recoverable geo-carbon energy are depleted. But traditional ‘renewable’ energy resources, those ultimately based on energy from the sun or geothermal energy, I think must be ruled out as they never have been able to support more than a small fraction of our energy needs. One might ask; how large would a solar energy farm have to be if it were to supply the total energy now used in the state of California? How many people would be required to keep the cells clean and functional? What would we do at night or in cloudy weather? How much expensive copper would be required to link all those cells together?
I suspect that all we can look forward to is a reversion of population and lifestyle back to the 1880’s, if we are going to be limited to energy from the sun as our primary energy resource. In that case, government officials who see this coming might be forced to put in place various unpleasant policies to facilitate an orderly population reduction.
The only energy resource that I see on the horizon that has any real likelihood of replacing ‘Carbon Power’ at our current rate of use is energy from thorium.
”Renewables alone, are not going to power this economy,” Mitt Romney.

kwik
December 5, 2011 4:24 am

ferd berple says:
December 3, 2011 at 7:52 am
“However, this won’t happen, because only the rich can afford the $50,000 investment, which means the poor in Ontario are paying the rich to install solar power.”
As it is allways, with subsidies. A few gets a lot from the many.
A funny everyday story from Norway:
A few years back a new independent company started producing milk much cheaper than the govmint milk. The govmint forced them to put on a tax on it, so the price became equal to the govmint milk. Oh yes.

December 5, 2011 5:07 am

Willis writes “Your solution to possible future transition costs is to triple the price of electricity and maintain that indefinitely?”
No, because I dont believe the cost is actually that high in the longer term. These studies are always based around what is known today and one can only imagine what might happen in the future as a result. But inevitably they dont form part of any projection as those changes tend to be speculative. I’m speculating.
A large component of the cost associated in those figures is the cost of energy itself and so drops in running cost are of a long term benefit in keeping costs low even if they initially cost more. I dont think its always easy to see that. So for example for argument’s sake imagine if we already had 100% solar PV then what is the cost to create another panel? Much lower than projected as there is a very low energy cost component and thats an obvious example. Its not always easy to see the related lower costs associated with all the activities surrounding the activity as well as the activity itself.
Willis then goes on “You have no evidence that the savings will be significant.”
You’re right. However I do believe the world where energy is not a resource based commodity (beyond initial manufacture obviously) would be a better one for many reasons eventually both economic and political.
Thats all ideal…I am more a realist than that, however, and fully expect we will go down the path of least resistance because thats what we always do. I can still have my say on the matter though.

Dave Springer
December 5, 2011 6:24 am

@Willis
“But with hydro (or almost any other conventional technology) you only need to maintain one really big generator on the ground.”
Really?
[sigh]
http://www.google.com/search?hl=&q=hydroelectric+generator&sourceid=navclient-ff&rlz=1B3GGHP_en___US455&ie=UTF-8&biw=1280&bih=677&sei=_NPcTqCXI8qDsgLn0KH0DQ&tbm=isch
[SNIP: Policy -REP]

Dave Springer
December 5, 2011 6:44 am

[SNIP: Policy -REP]
(attempt 3 to get this comment posted)
[REPLY: It will NOT posted. You have a grievance. Click on the ABOUT tab under the WUWT graphic and then click on “contact”, but this propensity for flame wars stops. -REP]

Dave Springer
December 5, 2011 7:28 am

Spector says:
December 4, 2011 at 6:24 pm
“Here is a recent video of a talk given by Dr. David LeBlanc on the design of thorium-based nuclear reactors with low potential energy cost. As far as I know, thorium-nuclear is the only energy resource that can meet our current needs indefinitely.
The we’re screwed.
“As a point of balance, here is a reference to a web article that is critical of the Molten Salt Reactor concept. The writer characterizes the supporters of ‘Energy from Thorium’ as a ‘Cargo Cult.’ I would hope that the problems raised by this writer prove to be false, illusory, or soluble.”
Unfortunately it IS cargo cult science.
It’s far too difficult to process solid fuel thorium. That leaves liquid fuels which in general is liquid flourine salt a.k.a. “LFTR” designs.
The problem with these is that liquid flourine at 700C temperature is so highly corrosive that few materials can withstand it for very long. The second problem is that the few materials that don’t rapidly corrode cannot withstand the high neutron flux from the liquid fuel.
These two problems combine into one where there are no known materials from which you can construct pumps and plumbing to shuttle the liquid fuel around that won’t fail so quickly that the inspection and replacement interval makes the whole enchilada economically impractical.
This is simply a bunch of people trying to make a fast buck by getting research funding and ignorant idealists who are willing to give it to them.
But hey, it’s a small step ahead of fusion (cold or hot) in practicality but it’s a long way behind solar (hydro, wind, biomass, biosynthetic).
Ultimately the sun is the only practical energy source that can meet our needs into the foreseeable future. Fortunately there’s far more sunlight than we need and there’s absolutely no engineering brick walls in the way of being able to produce cheap, abundant, carbon-neutral liquid hydrocarbon fuels by employing genetically modified microorganisms to turn air, water, and sunlight into those fuels. There is no basic discovery needed to accomplish this which means it’s an engineering problem not a science problem. When you have a situation like the LFTR where there’s no known material that can meet the design requirements it means there’s basic discovery involved and discovery of a novel material that doesn’t exist cannot be predicted nor even guaranteed. Sythetic biology on the other can be guaranteed because the technology and materials required already exist in nature and just need to be recombined rather than be invented. The recombination technology is in its infancy but is beyond proof-of-concept. The first completely artificial genome that brought a lifeless bacterial shell devoid of DNA back to life upon insertion happened a couple of years ago. It’s only a matter of time until the painstaking, error-prone process of creating synthetic organisms gets cheap enough and fast enough so that the trial-and-error process of recombining various desireable functions of different organisms into one super-efficient hydrocarbon fuel producer will meet with success. The Venter Institute is leading the way. Any thorium reactor, even if it could become economical someday, is almost certain to be obsolete and uncompetitive by the time it could be brought online commercially. Even the most optimistic estimates put a working, commissioned, commercial thorium reactor at least 20 years in the future and then it has to operate for another 20 years to recoup the cost of building it. That’s 40 years altogether and if something much cheaper comes along in the meantime it means anyone who invested in thorium will lose money and investors, at least the smart ones, don’t tie up money for that long without a really good chance of seeing substantial profit from it. Therefore thorium reactors are something only governments will possibly undertake. The United States government already built one and the classified details of its operation over ten years back in the 1950’s and 1960’s isn’t inspiring any new investment in it. One might wonder why the only nation in the world with actual experience with LFTRs is panning the notion of taking a second look at it.

December 5, 2011 7:44 am

Willis:
According to the Globe and Mail — you’re wrong…
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/installers-homeowners-cash-in-on-solar-industry-slump/article2259666/
Virtually everyone in the sector believes the time will come – likely within the next decade – when the price of solar power equipment falls to the point where solar is competitive with other forms of power generation. At that point FIT-like support won’t be needed and the sector will have reached the Holy Grail of “grid-parity.”
Now when have they ever been wrong…???
However, Mr. Robertson noted that Ontario’s FIT program – like similar schemes around the world – was designed so that the price developers get for the renewable power they generate falls as the cost of producing it declines.
And of course I though they were signing 20 year contracts — silly me…
Now, I’m off to see the Wizard… for reliable information. 😉

Dave Springer
December 5, 2011 8:29 am

Colin Megson says:
December 4, 2011 at 1:59 pm

You can run by a design for a Liquid Fluoride Thorium Reactor (LFTR) and know it won’t be half the price of a Gen III Pressurised Water Reactor(PWR), which are the ones being planned for and built at the moment – that takes it to, say, 5cents. Also the thorium fuel costs, operation and maintenace will be half that of PWRs – 2 cents. All in all LFTRs will be as cheap or cheaper than CCGTs (and they can load follow as well). See the heading to this blog to get an instant perspective on the environmental effects of obtaining our energy from: Coal – Uranium – Thorium: http://lftrsuk.blogspot.com/

Too bad there’s no known material that can simultaneously resist the corrosive action of 700C molten salt and high neutron flux.
Other than not being able to build pumps and plumbing to shuttle the liquid fuel around they’re a really cool item, huh? Sort of like electric cars are really great if only there was an affordable battery with the power/density of gasoline.
What part of “there is no known material that meets the critical design criteria for pumps and plumbing” do you not understand?

Dave Springer
December 5, 2011 9:30 am

coldlynx says:
December 3, 2011 at 2:00 am
“Never thought I would disagree with You Willis, but on this I do.”
You probably hadn’t realized that once Willis reaches a conclusion then to him it becomes dogma.
“You and US Energy Information Administration compare solar cells with other large scale electricity production alternatives. But solar cell is mainly, as on Your boat, a small scale solution for electrical consumers. Solar Cells have to be seen from small scale consumer perspective not from a large scale production perspective. With solar cell on my house will I get more independent from large companies, energy taxes and grid utility companies. I love that. Then can can I show them my longest finger. That feeling is worth a lot to me.”
Yes of course. A minimal amount of research shows that the mass market potential is in residential and small commercial grid-ties. Cutting out the need to store power in batteries or some other scheme and instead selling excess generation back onto the grid with net metering is the way to go. Batteries easily double the levelized cost of the system and are only economically viable when the grid is so far away you can’t afford the cost of getting a connection to it.
The decentralized nature of this also means that the current grid can handle a lot more capacity because when you have excess generation it will likely be consumed by your closest neighbors who don’t generate their own juice so it doesn’t add to the amperage on high tension long distance grid elements.
“Price for PV panels is now below USD1 per watt and falling.
That give in Sunny states a annual output of up to 2 kWh electricity. Grid inverters are now also falling in price. It is in many places now a good investment for consumers but not for producers to get solar panels.”
Funny how it works that way with solid state electronics. One might have thought Willis was an astute enough observer old enough to appreciate what happened with radios, telephones, televisions, microwave ovens, and other solid state electronics. PV panels and grid-ties are no different except they have yet to see the benefit of economy of scale and adoption of industry standards.
“I have been in computer business since 1982 and I see a very similar development as the PC went through. Now is large scale computing made by many small PC processors. In the very near future will many small scale PV installations in total be producing larger amount of electricity than large scale production facilities. Just because it is good investment, for consumers.”
I’ve been in the computer business since the 1970’s but it doesn’t seem like it should take a rocket scientist to appreciate the price/performance curve in electronics from infancy to common household item.
“And of the joy to get independent. A small scale revolution. ;-)”
I’m not really interested in flipping off my electric company. It’s a cooperative to begin with and isn’t particularly offensive in any of its practices and serves an awful lot of rural customers with prices similar to densely populated areas where transmission costs are much lower. The retail price they sell power to me at is half the price they’ll buy it from me at which is reasonable. If PV generation price goes the way of other solid state electronics I’ll be able to sell electricity to the local coop at a profit. Now THAT would be cool.

LarryD
December 5, 2011 10:51 am

Re: Subsidies
The latest (2010) EIA report is here. Renewables get 55% of all subsidies, most of it going to wind.
About half of nuclears subsidies is in the form of R&D.

Spector
December 5, 2011 11:02 am

RE: Dave Springer: (December 5, 2011 at 7:28 am)
“The problem with these is that liquid flourine at 700C temperature is so highly corrosive that few materials can withstand it for very long. The second problem is that the few materials that don’t rapidly corrode cannot withstand the high neutron flux from the liquid fuel.
“These two problems combine into one where there are no known materials from which you can construct pumps and plumbing to shuttle the liquid fuel around that won’t fail so quickly that the inspection and replacement interval makes the whole enchilada economically impractical.”

As far as I know, this was not a problem with the Oak Ridge demonstration unit. I understand the fluoride salts used combine fluorine with base elements to which it is more strongly attracted than almost anything else. Highly connected scientists from China are reported to be in possession of all data extant from the original Oak Ridge demonstration project and working on developing their own version.
”This is simply a bunch of people trying to make a fast buck by getting research funding and ignorant idealists who are willing to give it to them.”
That is always a possibility.
”Ultimately the sun is the only practical energy source that can meet our needs into the foreseeable future. Fortunately there’s far more sunlight than we need and there’s absolutely no engineering brick walls in the way of being able to produce cheap, abundant, carbon-neutral liquid hydrocarbon fuels by employing genetically modified microorganisms to turn air, water, and sunlight into those fuels.”
This sounds just like another form of solar power, perhaps ‘bio-solar.’ One might wonder how many solar petroleum trees or solar algae vats would be required to generate 100% of the power used by the state of California, how large an installation would be required, and how many people would be needed for their maintenance. My guess is that one would be lucky to collect, on average, 100 watts per square yard by such methods. With abnormal microorganisms used on a large scale, there is always the risk of them escaping into the wild and causing a massive change in the chemistry of the planet.
“ The United States government already built one and the classified details of its operation over ten years back in the 1950′s and 1960′s isn’t inspiring any new investment in it. One might wonder why the only nation in the world with actual experience with LFTRs is panning the notion of taking a second look at it.”
Of course, China is reported to have the surviving data from those experiments now. With multiple technical options available, there is often a tendency to standardize on the first method developed and suppress the development of all incompatible alternatives. I suspect the current administration looks at nuclear power as did Ralph Nader when he called it ‘poison power.’

Claude Harvey
December 5, 2011 12:06 pm

I do wish some of you people would learn how to run a “life of project” financial analysis on a “levelized”, “discounted cash flow” or any other basis recognized as valid by investors and banks the world over. You would then see that capital costs, fuel costs, other O&M expenses and the time-value of money are all essential components of such an analysis. Any one of those elements can swamp all the others and render a project uneconomic.
If you will take the time and make the effort to do that, you will recognize the foolishness of many of the pro-solar statements made in many of your comments, including the following grand prize winner:
“The cost is born up front and whilst you may not immediately see the benefit of that, I certainly can.”
That statement exposes woeful ignorance of “the time-value of money”, a fundamental element in any financial analysis. The bottom line is that centralized, photovoltaic solar, even taken to its most optimistic and theoretical best conversion efficiency, useful economic life and capital cost limits gets sunk on “capital cost per average Kwh of output”. That’s the bottom line for unsubsidized central solar and that was the basis for Willis’ conclusion. It wasn’t an arbitrary or uninformed opinion. It was a rational conclusion that no amount of “hand-waving and posturing” should be able to change.

Cyrus P. Stell, P.E., CEM
December 5, 2011 2:03 pm

Willis, and all commenters
Interesting analysis, I agree with your critiques of the information as published by EIA. There’s something else, though (I scrolled to Reply when I got ~1/4 way through comments, so forgive me if somebody else covers this) you hinted at only briefly, when you made the statement, “…will not be economically viable any time soon.” The numbers you published are static numbers, a snapshot taken at a particular point in time. For solar and wind to become competitive vs. fossil fuels, it follows we must see a rise in the price of fossil fuels? But what does that do to the production cost of not only solar panels but all the appurtenances you mentioned, as well as up-keep costs? My bet is all those costs increase, as well. I went to college and got a mechanical engineering degree with the vision of designing the replacement for fossil fuels. When I took elective engineering courses, I concentrated on solar thermal design. Our analysis found that the best you could hope for, with a cheaply built system, was a 10 year simple pay back. But, we logically reasoned, just as is reasoned today, that mass production will reduce the price of capital in a solar system, while the price of petroleum products will do nothing but increase. Well, apparently there was an invalid assumption in there someplace, or we failed to acknowledge the interconnectedness of prices of the choices, because here it is 35 years later, and still when I evaluate solar to replace fossil fuel generated electricity, I still get a simple payback in excess of 10 years, and the number I get today is even bigger than the one I got 35 years ago. You can change your “…anytime soon.” to NEVER.

mike g
December 5, 2011 3:39 pm

(and Hultquist)
Google frack acquifer

John M
December 5, 2011 4:55 pm

This seems strangely appropriate. At 0:30 in this video, what do you suppose is on the roof of this house?
On top of everything else, do you suppose they got solar subsidies as well?

kakatoa
December 5, 2011 5:13 pm

If anyone you know happens to live in Gainesville, Fla, and you/they obtain their electrical power from the local public utility it’s too late to sign up for the utilities 2012 FIT program (which pays generators $.32 kwh). You can still get into their Net Metering Program- which will pay you about $.115 kwh for energy you send to the grid. These programs (and GRU’s rebate program) are noted in the link below-
https://www.gru.com/YourHome/ProductsServices/solar.jsp
It was nice to see that GRU is calculating a PV systems output based on the California AC rating method.
It will be interesting to see how GRU is going to allocate their increased costs, for the PV they are supporting- https://www.gru.com/Pdf/calculatingElectric.pdf- Their Fuel Adjustment per kwh seems like a good place to allocate these costs.

December 5, 2011 6:11 pm

Willis writes “That’s exactly why we are discussing levelized costs, Tim, because they avoid all those problems. Please try to follow the discussion. Levelized costs use the net present value of future activities precisely to take care of the issue you are discussing.”
No Willis. That report is written in the world where fossil fuels reign and energy supply has large components of costs associated with exploration, extraction, processing and distribution on an ongoing basis.
You’re not following my reasoning and instead simply spouting back what the report says. The writers of that report cant possibly take all those factors into account when coming up with a long term energy supply cost of PV solar with any accuracy because eveything is intertwined.
Disagree with it if you want, but at least disagree with reasoning as relates to the inadequacies of that report rather than ignoring it entirely.

December 5, 2011 6:26 pm

Claude writes “That statement exposes woeful ignorance of “the time-value of money”, a fundamental element in any financial analysis. The bottom line is that centralized, photovoltaic solar, even taken to its most optimistic and theoretical best conversion efficiency, useful economic life and capital cost limits gets sunk on “capital cost per average Kwh of output”. ”
No Claude because you’re ignoring the fact that the reduction of cost per average Kwh of output due to decreased runnig cost feeds back into the subsequent production cost and nobody but nobody can accurately forcast the impacts of that.

wexpat
December 5, 2011 6:28 pm

Why does not Germany use it’s abundant brown coal and nuclear plants to spin the wind turbines?

December 5, 2011 6:31 pm

“Claud also wrote “The bottom line is that centralized, photovoltaic solar, even taken to its most optimistic and theoretical best conversion efficiency”
Oh and one more thing, who ever said anything about centralised PV solar? One of the big benefits of PV solar is that it can easily be distributed which benefits in increased redundancy and decreased transmission costs (a less loaded network).

juanslayton
December 5, 2011 7:35 pm

Cyrus:
The numbers you published are static numbers, a snapshot taken at a particular point in time.
You make an important point. I think, though, that we need two snapshots, and they have different parameters.
Snapshot A: I buy solar today and pay a stiff price differential on capital expenses. If prices remain stable for 20 years, I lose.
Snapshot B: Twenty years later prices have not remained stable.They have in fact risen considerably, thanks to the combined efforts of the California Greenshirts and Federal voodoo economists increasing the money supply. Coal still retains a huge advantage over solar for new installations, as you and Willis have described, with capital costs for both solar and coal rising proportionally. However, Snapshot B does not include capital costs;
these were paid 20 years ago. The fuel costs for solar, essentially zero, have not changed. Thus it is possible that the long-term economics in an inflationary economy could even make solar competitive. (I am, of course, not addressing any of the non-economic problems with solar.)
The exasperating thing is that this scenario is exactly what the Greenshirts are trying to achieve with California’s cap and trade scheme. The individual consumer winds up having to protect himself by being the first to invest in something that would make no sense in a stable economy.

juanslayton
December 5, 2011 7:37 pm

Well, nuts. I needed a after ‘point in time.’

juanslayton
December 5, 2011 7:44 pm

There’s gotta be a way to show this. You know, a / and an i between a . Mods, help!

Willis Eschenbach
December 5, 2011 8:52 pm

TimTheToolMan says:
December 5, 2011 at 6:26 pm

… No Claude because you’re ignoring the fact that the reduction of cost per average Kwh of output due to decreased runnig cost feeds back into the subsequent production cost and nobody but nobody can accurately forcast the impacts of that.

Not only can nobody forecast the impacts of that … I can’t even understand that.
I think I understand your words. You say that
1) Solar running costs will decrease (for unknown reasons).
2) This will reduce the cost per kilowatt hour.
3) This in turn will “feed back into the subsequent production cost”.
Although I understand the words, I fear that I don’t believe what they say. Why will the running costs (presumably of solar) reduce?
In any case, solar running costs are only two cents per kWh, so how can they reduce much? Suppose they dropped by 50% … that’s 1¢ per kWh.
And how will that one cent reduction feed back into production cost?
w.

Ducky12
December 6, 2011 12:02 am

Only read first few dozen comments, so this may have been said already:
There are so many taxes & subsidies & etc, that the actual, real, costs are pretty much impossible to determine. Last time I read up about this, after a whole lot of digging one item was spectacular clear: wind was by far the most expensive option, greatly in excess even of solar. (More than an order of magnitude above coal.)
In other words, I don’t trust your graph. At all. I think it is based on numbers that are flat-out lies.
Another point: inverters have an average lifetime of maybe 6 years. Which means that they have to be replaced that often: so integrating them with the panels (25+ year lifespan), would be patiently idiotic. Additionally, the manufacturers of these devices are on record as saying that they do not foresee these lifespan values changing by very much (are inherent to semiconductor components & failure rates). Also, the price-drop curve for the inverters is lagging FAR behind that of the panels… And in any case such curves DO NOT continue forever and ever and ever more downwards: solar-device costs are NOT equivalent to CPU cycles!!! Otherwise we would all be driving 10c BMW’s, pumping 0.001c/gallon gasoline-alternative… none of which, in case the hippies have not noticed, we are not.

December 6, 2011 1:09 am

Willis writes “I objected that you had left out the other incremental cost of wires and the upsizing of the alternator and the additional rack to mount the panel and the labor to do all of that …”
Thats fair enough there are certainly initial installation costs involved but not all panels will always require an increase in the inverter capacity if the existing inverter still has capacity and at any rate they’re paid for over much less than the life of the panel.
There are concrete examples today actually. I have several friends who have solar PV installations and so far their projected payback period is about 8 years. Probably less if the cost of energy increases as is likely. The solar rebates are decreasing in Australia solar instllations are still affordable and popular.
I disagree with your general suggestion that the cost is about as low as its going to get. PV solar is still far from a consumer product in the same way a computer is now. Computers have dropped to a tiny fraction of what they were once worth and the same will happen to any technology that gets mass adoption. Much lower than you think is possible I would suggest.

December 6, 2011 1:18 am

Willis writes “Although I understand the words, I fear that I don’t believe what they say. Why will the running costs (presumably of solar) reduce? ”
Because there are virtually no running costs for PV solar. Once installed they pretty much take care of themselves and over time their reliability will improve too.
Compare this fundamental feature of the enrergy production to that of oil where there are ongoing costs to produce that oil. Exploration, development, extraction, processing, distribution. All those costs are always with us and always increasing.
Now you might argue that you can make more money by “investing” rather than spending on PV solar with a return over many years. And you may well be right but thats irrelevent This isn’t about how you can make the most money, its about how we can best cater to our future energy needs and “investing” sure doesn’t do that.
You can “invest” in fossil fuels and sure you’d make more money. Great if thats the goal to make money but its not the path I prefer.

December 6, 2011 3:14 am

Willis writes “It means lots of small switchgear, which is more expensive than single large switchgear. Same is true for inverters.”
Its that kind of reasoning that leads to statements like ““I think there is a world market for maybe five computers – Thomas J. Watson .””. Reality has an electric drill in every household and on average its used only a few times ever. People dont mind buying and owning stuff even when they could simply borrow someone else’s drill or hire one. Thats a fact of life.
Willis writes “Redundancy also means a whole lot more generating units that need to be reliably disconnected from the grid when there is a power outage, to keep from frying the repair personnel.”
You’re dissing redundancy? Distribution companies spend a fortune on redundant feeders and switchgear to manage them. Live line maintenance is common and in the worst case, one only needs to disconnect a bit upstream and downstream of the fault to isolate it.

Cyrus P. Stell, P.E., CEM
December 6, 2011 6:38 am

: You have pointed out the inherent weakness of all future casting. We make assumptions, based on the available evidence, and then run the numbers and see how it pans out. My analysis MUST include a life-cycle-cost analysis or it’s worthless. To make that analysis, we decide in advance what we expect future cost increases (or decreases) to look like. EIA projects such numbers, and I use them despite my misgivings (there was another thread, here or somewhere, about how EIA consistently over-estimates future cost of fossil fuels, and under-estimates future costs of “renewables” as defined by legislation). Here’s the thing, though, when we do an engineering analysis we are comparing alternatives. i.e., do I keep what I have, do I buy more of what I have, do I install more of option A (maybe that’s solar PV) do I install more of option B (call that solar thermal) or option C (maybe that’s wind). From that analysis you derive Levelized Costs (gee, where have I heard that term before? Oh, yeah, refer to the title.)
Now if we make the wrong assumption about, say, the future costs of electricity, in many cases it won’t matter if we’re comparing something that just uses different amounts of electricity, the same “wrong” costs are in all of the life cycle equations, so it still gives a fairly accurate picture of the best choice. But when we’re comparing different technologies, we have to be a bit more certain of our future-casts. But, you start off assuming no consideration was given to a wrongly forecast future price, and in fact, it was carefully considered. As I originally stated, we assumed 35 years ago that our assumptions (double assumption? I’m leaving it in there) were likely wrong in one direction (future costs of capital would decline while future costs of fossil fuels would rise at some rate) and it turned out we were wrong in the other direction (future costs of fossil fuels in inflation-adjusted $ actually declined for a long time, while the future cost of capital equipment, at least the equipment we were selecting, did not decline, or at least not as much as we had hoped, and might have even risen). So at this point, it’s not just a coin flip to determine who’s most likely right, the figures published by EIA have some analysis behind them, while your hypothesis is just that, a figment of your wishful thinking. Guess who I’d put my money on?
Next point, you talk about operating costs of already-installed solar being near zero, and that’s just false. I worked at a place that had made 3 different installations of solar-thermal, and all 3 were deactivated well before the projected end of their expected useful life (the life used in the LIFE-cycle cost analysis) and 1 had been demolished and removed entirely. Why were they inoperative? One thing, well, maybe 2… They got no maintenance, not even drain-down in advance of freezing weather, so much of the tubing burst, and secondly, they were not metering the production of the solar-thermal, so when the question came up, “is it worth it to repair these?” nobody could argue that it was. One of the earlier commenters posted a link to solar installations that had received no maintenance, both solar-PV and solar-thermal, so scroll up. You need to re-evaluate that assumption.

Andyj
December 6, 2011 9:55 am

I’ve fitted a vacuum tube solar panel to my roof. Did not seek subsidies nor paid the rip-off rates for buying/fitting here in gloomy UK.
£500, paid for itself in 18 months two years ago and it looks good for the next 25 years of free hot water for 8 months of the year.
Absolute no-brainer. No energy supplier can better that.

mike g
December 6, 2011 11:34 am

So, Willis, I’m skeptical of the safety of fracking and I mispelled aquifer and I’d rather see coal burned for electricity than gas. Y’all are tough on skeptics here.

DirkH
December 6, 2011 11:51 am

TimTheToolMan says:
December 6, 2011 at 3:14 am
“Willis writes “It means lots of small switchgear, which is more expensive than single large switchgear. Same is true for inverters.”
Its that kind of reasoning that leads to statements like ““I think there is a world market for maybe five computers – Thomas J. Watson .””.”
Here, Tim has a point. We’ve only just started to seriously mass-produce inverters; there’s a lot of room for driving down the production cost. Compared to say, motor electronics, which are produced nearly 100% automated – a typical assembly line produces 5,000 of them or so in an 8 hour shift, and a factory has maybe 10 such lines – inverters are still large boxes with a lot of manually connected cables. This will change when we use one small inverter per module; they become as small and as plentiful as motor electronics boxes, in the millions of pieces range, and the same automation will be used for mass production. Shortly thereafter they might become solid state modules, and later one chip solutions. I’m fantasizing here, but that’s what usually happens when the numbers are scaled up.
” Reality has an electric drill in every household and on average its used only a few times ever. ”
Tim, you shoot yourself in the foot here – that’s exactly not an example for high efficiency ;-).

DirkH
December 6, 2011 11:59 am

Willis Eschenbach says:
December 6, 2011 at 11:46 am
“No, I’m not “dissing redundancy”, Tim. I am a realist who knows that there are problems that come along with every solution, including redundancy. For generator redundancy, one of the problems is disconnection of all of the generators in cases of system failure.”
Willis, all solar inverters used in Germany need to switch themselves off as soon as the grid frequency rises above a certain threshold – because this frequency signalizes overload. Similarly, a lot of emergency conditions are already encoded in the inverters; they have a digital signal processor that does about 15,000 cycles a second and checks these conditions.
Most inverters will only feed in when an outside grid exists; they never build up a grid by themselves! Disconnecting the grid suffices to make them all shutdown by themselves.

Louise
December 6, 2011 12:00 pm

On December 3, 2011 at 8:03 pm, Willis Eschenbach says:
“why do you have to be so snarly and ugly and nasty? All it does is make you look like a vicious, vindictive little man.”
Pot, kettle?

DirkH
December 6, 2011 1:04 pm

Willis Eschenbach says:
December 6, 2011 at 12:40 pm
“Thanks, Dirk. And would you be willing to bet your life that the disconnects all work correctly 100% of the time? I wouldn’t, I can easily envision conditions where the breakers wouldn’t pop. I’ve seen too much of “machinery gone wild” to think that safety systems are failure-proof. And repairmen are indeed betting their lives on your claims …”
I’d much rather trust a system designed under safety-critical considerations than anything else, because that’s the best bet I can make. As an additional precaution, gloves can’t harm 🙂
“In fact, one of the disadvantages is that you need (as you point out above) special switchgear to disconnect each solar rooftop installation.”
That’s exactly one of the beauties of one inverter per module – the inverter semiconductors do the disconnect. When you have a large inverter for a string of modules, you get a DC voltage of about 800 V; that can be nasty. Not so with the microinverters. You have the output DC of one module, that’s 60V or so. (I’m guessing). Even if the the emergency switchoff fails, the voltages are not that dangerous.
At the moment, efficiency lags behind big inverters and total costs are higher. We will see. I’m not trying to advertise anything, at the moment I have no business interests there.

kakatoa
December 6, 2011 1:17 pm

Timthetoolman has a few statements-
1) “Because there are virtually no running costs for PV solar. Once installed they pretty much take care of themselves and over time their reliability will improve too.”
2) “I disagree with your general suggestion that the cost is about as low as its going to get.”
Tim,
In response to statement 1:
My PV system has been in service for 5.5 years. In that time I have had my inverter serviced once (software was incorrect in how it calculated kwh’s- it read low by about 25%)- the upgraded software then read about 10% high per a separate kwh meter I had installed just before my PG&E E-7 net meter. After about 2 years of service my inverter started reporting negative values for one of the attribute it reports (instantaneous wattage). Rather then try to figure out what was wrong with my original inverter the unit was replaced. The new inverter has worked fairly well- it reports my kwh output about 4% high per my secondary kwh meter. The estimated mean time to failure for inverters is around 10 to 15 years, so any cost calculation needs to take this into account. Additionally, the efficiency of the inverter is not going to improve over time.
If I don’t keep a fig tree trimmed, that is located just south of a couple strings of my panels, my output drops by about 20%. Hence I have some ongoing maintenance for my system to operate at it’s rated POTENTIAL max output. Over the years I have found that without cleaning my panels (especially in the dry, dusty summer months) my overall output will drop between 8 and 10%. My weekly preventative maintenance is rather straightforward- a rinse with water from my garden hose with a fairly strong stream of water- geese fly overhead occasionally and it takes a bit of water pressure to remove their droppings from my panels).
As far as reliability goes each manufacturer of panels is required (in CA anyway) to limit (warranty) the degradation of their potential max output (STS rating) over the expected life of the panels. For my panels an expected degradation in STS max rating was something like a 20% reduction in STS max output over time (time being 20 or 30 years for my panels) of the warranty.
In response to statement 2- “I disagree with your general suggestion that the cost is about as low as its going to get.”
I concur with Willis on this one but with a change in the word cost to price for an installed residential PV system. As the balance of system (copper wire, inverter, aluminum railing system and installation labor, shipping) costs become a larger part of the overall system costs a 5 to 10% improvement in the cost of the panels are going hit the law of diminishing returns from a total price to purchase a self generation option. The price I paid to have my 6.12 Kw system installed in 2006 was $1.10 a Kw. Today the labor and misc materials (some cu wire, shut off switches) costs are between $1.30 and a $1.50 a Kw out here in CA to put a 6.12 Kw system in. The price paid by the wholesaler who I bought my panels from has gone down with the drop in panels costs. Their costs for the Al railing and their cost for the inverter haven’t come down. Their costs for shipping (primarily fuel costs related) have gone through the roof so free shipping is no longer included in the purchase of the hardware components of a PV system. The best price (before rebates, and tax credits) to have a mid sized investment grade residential PV system (4 to 10 kw) installed are likely never going to get below $3.00 to $4.00 (CEC AC rated) watt. Under my version of a best case scenario for residential PVgeneration (lets use the VERY optimistic $3.00 (installed watt cost)* 5.22 CEC Kw rating (the AC rating of my PV system)= $15,660.00 which yields a total yearly output of 9300 kwh- for a 6.12 kw STS rated system). The upfront costs in this best future scenario is $15.6K for a 5.22 kw cec rated residential system and it will yield 9300 kwh a year

DirkH
December 6, 2011 1:58 pm

Willis, you’re really having a bad day; I’ll leave after this comment. Nobody forced you to answer my comment; so blaming me for saying “Tim has a point there” with “We were discussing whether this kind of inverter is cheaper than that”, well, that’s just silly. No offense; don’t work yourself up. Bye.
http://en.wikipedia.org/wiki/Solar_micro-inverter
“Released in 1993, Mastervolt’s Sunmaster 130S was the first true micro-inverter.”
Looks pretty real to me:
http://www.smartsolarsystems.biz/wp-content/uploads/2011/05/micro-inverter-install6.jpg

December 6, 2011 2:05 pm

The chart shows 16 electrical energy sources. The costs of production do not include externalities, so they constitute a rough guide on real costs of production.
One poster noted that solar hot water, by comparison, in effect delivers energy at a much lower cost, yet this source of energy is omitted.
I also note that a British study has showed that the cost of reducing electricity demand varies from zero (in the case of turning down a thermostat, for example) to less than 1 cent per kw for many simple technologies like lagging of hot water pipes, but almost always much less than the unit cost of supply.
This endless and often bitter dogfight over preferred energy supply technologies is interesting, but it has very limited horizons.

Spector
December 6, 2011 2:46 pm

Solar power may be useful as an auxiliary power source, but eventually carbon-power is not going to be an option. (Bio-solar carbon excepted.) I am not prepared to say when that might be, but it does look like we are now consuming more carbon-power than we are discovering, at least in the case of petroleum.
I look at this as a question of whether energy from the sun can replace exhausted carbon-power in all uses. How much of the earth’s surface must be set aside so that each person can collect all the energy needed for heating, transportation, and feeding from the sun. That presumes the manufacture of synthetic transportation fuels. I am guessing that the average recoverable solar energy is less than 100 watts per square yard.
We do know that back in 1880 we had a lifestyle model and total global population that did not depend on carbon-power to the extent we do today.

December 6, 2011 4:21 pm

Willis writes “Running costs for solar are currently about 2¢ per kWh. You said they would reduce. ”
Come on Willis, get a grip. From your original diagram, do you seriously think that running costs of Coal at 3c vs running costs of Solar PV at 2c is correct?

December 6, 2011 4:33 pm

WTF Wills? “I was responding to Tim, who seemed to think that there were only advantages to distributed generation, and no disadvantages or hidden costs in distributed generation. ”
You’re the one who brought up the disadvantages of many generators connected to the grid without mentioning the fact the added redundancy was also a good thing.

kakatoa
December 6, 2011 8:51 pm

Evening Willis,
The 9300 kwh per year I noted is my actual 6.12 kw STS rated (5.22 CEC rated AC) output for my system- measured using the separate kwh meter I had installed after my problems with the non accurate numbers from my original inverter. I reside up in the foothills (out of the fog and most of the time out of the snow) south of Highway 50 at a 2400 elevation. My panels are roof mounted facing south (the building were built with the roofs this way- I didn’t have anything to do with it) with 12 of them at a 30+/- % slope and the other 24 at a slope of 16%. Back when I was trying to find a way to pay PG&E less then I did in 2005 (we had a yearly electrical bill of $3600 and we used 2200 kwh from PG&E in 2005) I looked into self generation as an option. The local airport had loads of wind speed data- the data said the average and SD of the wind speed in my area were not appropriate for any self generation wind option. I thought of just telling my 80 year old parents (who were living with us at the time) that they couldn’t turn on the air conditioner or heaters….. but that didn’t seem like a good plan.
Back in late 2005 and early 2006 the PV installation industry wasn’t to developed- It was near to impossible to get anyone to come to my homestead- we live on 11 acres- to quote on putting some PV on a couple of my buildings. My make/buy decision was made a bit more difficult by the three firms that finally came out to the homestead to give me a quote. Yes, the sales representatives reminded me of a less then enjoyable used car dealer experiences. To make a long story shorter I ended up converting all the hardware (and installation) quotes into AC output per year as that way I could compare apples to apples. I got quotes all over the place price and output wise. And yes their quotes came out close the price noted in the LA Times article. I ended up being the general contractor for the project- I selected the hardware and location for the panels- and selected a reputable installer to put the hardware up (I would of lost 20% of my rebate if I had done the install on my own by the way) to save some money on the system. My wholesale hardware sourced system, before rebates and tax credits, ended up being $7189 Kw (DC) in 2006.
I did a quick check at the wholesale PV supplier who I got my hardware from and to find out what wholesale PV system pricing would be for a system that matches the output of mine- using the same manufacture for the panels. Per their web site it would cost $20808 to get the same 6.12 kw (STS rated) output without tax with free shipping. So it looks like one could put a similar system in place in the Bay Area today for:
hardware= $20808 +1768.68 (tax)= 22576.68 +7956 (install costs at $1.3 per kw)= $30532/5.22 kw CEC rated= $5900.00/ kw ac which is a bit less then your example. (BIG NOTE TO THE Moderators- your may or may not want to include the reference to the wholesaler I used back in 2006- http://www.gridtiesolarkits.com/mitsubishi-5232-watt-solar-power-systeme2.htm ).
My younger brother is rather handy (which comes in handy as he actually knows what he is doing when it comes to down to Mechanical and Electrical engineering items- his degrees). If I was going to be a general contractor for a PV system in the future I could likely convince John to visit for a week and cut the install costs down by half.
These days the federal tax credit for going with a PV system (green?- well that is another question as my power actually comes from a small hydro facility that feeds my distribution line) is 30% (it was limited to $2k back in 2006) so the final out of pocket cost for a PV system, installed by a contractor (vs. my brother) would be $5900.00- (.3*5900)= $4130 per AC kw. in 2011. I think the PG&E rebate amount for PV is down to something like 30 cents a kw which you can get from PG&E if your don’t install the system yourself and I didn’t include this in the cost side of the equation as I don’t know what the permitting costs are these days (likely a lot more then the $250.00 I paid back in 2006).
On the benefit side of things in CA one can leverage PV (an enabling technology) to risk going with a time of use meter (E-7 in my case) which reduces the cost of a kwh to $.075 for baseline power from PG&E during off peak times. Additionally if you can really manage your load it allows you to get a .30 credit for kwh’s sent to the grid at peak times in the summer.
I concur that for base load and reliable (i.e. no intermittency and scalable) peaking electrical generation natural gas fired plants are the way to go.

Spector
December 6, 2011 10:00 pm

RE: Willis Eschenbach says: (December 6, 2011 at 5:22 pm)
Take a look at the amount of natural gas that has recently been discovered. Take a look at the entry of the Canadian tar sands, larger than Saudi Arabia, into the equation. You’re not keeping up with the times, my friend. For the first time since the 1970′s, the US is about to become a net exporter of refined petroleum products. Your claim is simply wrong.
I base this on Figure 3 published in David Archibald’s article, “Peak Oil – now for the downslope” and his reputation as a petroleum expert. Jeff Rubin, *former* CIBC chief economist, has been writing in the Globe and Mail that the US debt situation makes it likely that China and India will be the primary customers for Canadian oil.
”Since we also have energy available from nuclear fission (and perhaps fusion as well), I don’t see why you are limiting your analysis to the sun.”
I am posing this as a response to those who insist that we all must depend on traditional ‘renewable’ energy resources for the good of the planet.
”In any case, 100 watts per sq. yard (or square metre) as a total recoverable solar yield seems high. Let me think about that.
That was an absolute upper limit guess as to what might be obtained as an annual average including the effects of cloud and hours of daylight. It may well be much lower as you suggest. That greatly increases the footprint of the solar farm that would be required to replace carbon-power.
[We do know that back in 1880 we had a lifestyle model and total global population that did not depend on carbon-power to the extent we do today.]
If you wish to return to a “lifestyle” where kids routinely died because there were no antibiotics, that’s easily done. Just move to rural Africa. But don’t expect me to clap and join in the move, thanks.
I think something like that is just what might happen if we are all eventually constrained to the use of traditional ‘renewable’ energy resources.

Spector
December 7, 2011 2:15 pm

RE: Willis Eschenbach says: (December 6, 2011 at 5:22 pm)
“A typical solar system might have an efficiency of 10% or so, which means that currently we could harvest about 17 w/m2 in Louisville.”
According to one reference, (T Boon Pickens) we are currently harvesting about 85 million barrels of petroleum a day. Each barrel has the energy equivalent of about 1.7 million watt-hours. Thus we are extracting 145 terawatt-hours a day or a sustained global energy flow of about six terawatts. A solar farm required to produce that much energy by your figure would be about 354 square gigameters or about 600 kilometers on a side. The installation cost, maintenance, and environmental consequences of such an array are indicative of the dark future of the exclusive use of solar power. It would be ironic if an array that large influenced the climate.

R. de Haan
December 8, 2011 11:16 am
Willis Eschenbach
December 9, 2011 10:18 am

The Aussies need a stern talking to by TimtheToolMan. They clearly haven’t realized that distributed systems are so much superior to centralized systems, or as Tim put it …

… Oh and one more thing, who ever said anything about centralised PV solar? One of the big benefits of PV solar is that it can easily be distributed which benefits in increased redundancy and decreased transmission costs (a less loaded network).

Here’s how Tim’s “less loaded network” is playing out in Australia (emphasis mine)

THE runaway take-up of rooftop solar panels is undermining the quality of electricity supplies, feeding so much power back into the network that it isstressing the system and causing voltage rises that could damage household devices such as computers and televisions.
Power distribution lines and home wiring were designed for electricity to flow from power stations to appliances, but households with solar panels do the reverse of this.

Now, what do you think will happen because of this?

One of Australia’s biggest electricity network providers, Ausgrid, yesterday warned that there was a “significant likelihood” that costs would have to rise because of the impact of the solar photovoltaic cells.

Costs go up. There’s a surprise. And remember, dear friends, that these are the kinds of costs of renewable energy that are NOT included in Figure 1 above. The article continues:

In a letter to the NSW pricing regulator, obtained by The Australian, Ausgrid warns that in areas with a high concentration of solar cells, voltage levels can rise and this can have “consequences for appliances and equipment in customers’ homes”. It can also cause solar systems to switch off.
In Queensland,some new applications for rooftop solar systems have been rejected and Energex now urges customers to check that a solar PV system can be installed without threatening the operation of the network.
In Western Australia, Horizon Power has set limits on how much renewable energy can be installed in a system without affecting the power supply. Horizon is rejecting applications for new renewables installations in Exmouth and Carnarvon, and accepting them only from households, schools and not-for-profit organisations in Broome and Leonora.
Energex spokesman Mike Swanston said it was becoming difficult for electricity distribution authorities to set up the power system to ensure correct voltages when some houses in a street had solar and others did not.

The joys of distributed solar electricity …
w.

LazyTeenager
December 9, 2011 9:29 pm

The problem is that instead of 22¢ per kWh, the whole solar electric system at that point would have a levelized cost of 17¢ per kWh … and that is still two and a half times the price of the least expensive option, an advanced combination cycle gas turbine.
————–
That’s correct but only if the other costs do in fact stay fixed.
The cookie cutter nature of PV means that the whole system is subject to economies of scale. It is plausible that you could have factories building entire systems on assembly lines like cars.
Given market barriers this might not happen in the USA. But in China they need to build a lot of power sources of all kinds, but especially ones that prevent them from choking to death on SO2 aerosols from coal burning.
So while I am not an enthusiast for PV those costings from Willis could become out of date very quickly.

Willis Eschenbach
December 10, 2011 12:08 am

LazyTeenager says:
December 9, 2011 at 9:29 pm

The problem is that instead of 22¢ per kWh, the whole solar electric system at that point would have a levelized cost of 17¢ per kWh … and that is still two and a half times the price of the least expensive option, an advanced combination cycle gas turbine.

————–
That’s correct but only if the other costs do in fact stay fixed.
The cookie cutter nature of PV means that the whole system is subject to economies of scale. It is plausible that you could have factories building entire systems on assembly lines like cars.
Given market barriers this might not happen in the USA. But in China they need to build a lot of power sources of all kinds, but especially ones that prevent them from choking to death on SO2 aerosols from coal burning.
So while I am not an enthusiast for PV those costings from Willis could become out of date very quickly.

Hey, Lazy, good to hear from you. You are right about the “cookie-cutter nature” of large photovoltaic installations. I think, however, that you are drawing the wrong conclusions from that fact.
The problem is that PV is not new technology by any means. It has been built and pushed and subsidized for thirty years or more. As a result, the low-hanging fruit in terms of economies of scale have already been picked. You won’t see the cost of the racks, for example, dropping by much. Why not? Because there are a variety of manufacturers, and there is heavy cost pressure on them already. They are popping them out as cheaply and quickly as they can, and they’ve been doing it for a while.
Regarding China, they are building nuclear and coal. They do not have our inhibitions about breeder reactors, so they will have no shortage of nuclear fuel. As their economy improves, they will require the type of pollution controls on their coal plants that we have in the US. Those two will fix the pollution problems you mention above.
In the meantime, the Chinese will happily make solar cells for export sale to the West. And as someone pointed out above, they hope to be paid by the West to retire their coal plants in favor of nuclear when their coal generation systems start wearing out.
All the best,
w.

Jeffrey
December 21, 2011 7:44 am

I never had any trust that solar power could be sufficient on a industrial scale. However, despite this article I still think solar power can have a bright future when indidivual consumers start using it, when the energydensity of solarpanels goes up while the price goes down. I think this should not be subsidised, but i think it is so far to be taxfree, as you do not pollute anything.

Spector
January 2, 2012 12:56 am

“I never had any trust that solar power could be sufficient on a industrial scale. However, despite this article I still think solar power can have a bright future when indidivual consumers start using it, when the energydensity of solarpanels goes up while the price goes down. I think this should not be subsidised, but i think it is so far to be taxfree, as you do not pollute anything.”
If all nuclear power options were deemed to be unsustainable or impractical or just ‘politically incorrect’ then solar power or solar derived power is all that remains. I do not believe this energy source, alone, could sustain our current population, once the Earth’s sources of carbon power are exhausted. I believe we should be looking for a practical replacement energy source now, before we have to start dealing with the consequences of reduced energy availability.
As far as ‘taxfree’ goes, I expect you would have to pay property tax on the value of your solar power installations and there may well be a pollution impact in gathering the raw materials and the manufacture of your solar panels. You might also have to pay a monthly maintenance fee to keep them working efficiently.