Guest Post by Willis Eschenbach
“Between wind and water: (Nautical) In that part of a ship’s side or bottom which is frequently brought above water by the rolling of the ship, or fluctuation of the water’s surface. Hence, colloquially, (as an injury to that part of a vessel, in an engagement, is particularly dangerous) the vulnerable part or point of anything.”
Forcing people to buy expensive renewable energy seems like a really bad plan to me. But that’s what California is doing. It used to be capped at 20%, but the new law is that we’ll have to get 33% of our electricity from renewable sources by 2020. But that’s not bad enough. Here’s the goofy part, the part that makes it uniquely Californian, that marks it as being from the famous “Granola State”, home of nuts and flakes …
Because of the regulations requiring California to use renewable energy, it won’t be able to use all its renewable energy, and will have to throw part of the energy away.
I must confess to a great fondness for the law of unintended consequences. It involves us in situations of delicious irony all the time. You see, here in California, in order to be “renewable”, it’s not enough that power be hydroelectric. This is California, and we require better green credentials than the fact that hydroelectric is renewable to declare it “renewable”. You might think I’m kidding. Unfortunately, I’m not. Here is the California Independent System Operator (CAISO) report for the energy mix on Monday the 11th of April 2011:
Figure 1. Where California gets its electricity. Note that the top section, “Hydro[electric]”, is not counted with the “Renewables”.
Under the law requiring 33% renewables, any large-scale hydroelectric plant is not considered “renewable”. What the law calls “renewables” were about 15% of the total in 2009, and hydroelectricity was about 20%. So in fact, in California we are already getting 33% of our power from renewable sources … but that’s not good enough for the nuts and flakes, who could have guessed? Under the goofball definition in the law, most of our renewable energy doesn’t count as renewable energy. Figure 2 shows what’s included in the California so-called “Renewables” mix:
Figure 2. Renewable energy generation in California, 11 April 2011
So from the bottom up we have geothermal, biomass, biogas, small hydroelectric, wind, and solar … but no regular old, boring, and definitely renewable hydroelectric power.
Here’s one of the problems with this nonsense, from the Seattle Times :
Wind-power producers fight possible shutdown of turbines
PORTLAND — Pacific Northwest wind-power producers are battling a proposal that could force them to periodically shut down their plants in the months ahead, potentially costing them millions of dollars in lost revenue.
Bonneville Power Administration (BPA) officials say that limiting wind production could be required to free up space in the regional transmission system to handle hydropower generated from the melt-off of a huge mountain snowpack this year.
“We’re looking at doing everything we can to avoid the shutdowns but you have to be able to do something when your back is against the wall,” said Doug Johnson, a BPA spokesman.
… The BPA manages the regional power-supply system by balancing, minute by minute, the flow of electricity surging through the system with demand.
As the wind industry expands, the BPA has found it more difficult to transmit all that power and still meet other responsibilities, which include selling hydro power outside the region and spilling water over dams to aid the passage of migrating salmon.
Last June, the BPA balancing effort turned into a high-wire act as a late snow melt unleashed a gusher of water down the Columbia River at the same time that winds whipped up the power turbines.
BPA officials said that they couldn’t divert all the water around the hydroelectric turbines without putting too much dissolved gas into the river and placing salmon at risk. So they ended up running more water through the dam turbines and giving away their surplus power to utilities all over the West.
That spurred the agency to develop a new proposal to periodically shut down wind-power farms to help balance loads. The plan was embraced by public utilities across the region.
Why does this matter to consumers in California like myself? Because like idiots, we’re contracted to use the windpower despite the high costs of both production and transmission (emphasis mine) …
The dispute reflects major strains on the regional power system, which has been reshaped by a dramatic expansion of wind power in Washington and Oregon. Most of that power is exported to California and other markets outside the Northwest.
Of course, since regional planners all bought into the “we’ll never ever see winter again” mantra sold by the AGW alarmists, nobody was planning for a winter like this one. There was 61 feet of snow at some points in the Sierras, the reservoirs are full and over, we’re going to have more than enough water to generate plenty of power.
But none of that waterpower, not a drop, counts towards the California 33% renewables quota. So despite having already reached the 2020 goal of 33% renewables, here we are “between wind and water”. The utilities will all have to buy expensive wind power in preference to cheap water power … and then we can’t just release the water because it’s low in oxygen and will harm the fish, so then we’ll have to generate the power anyway and give the power away … that’s hell of a resource-management and conservation plan there, guys. Gotta love California.
w.
References:
Anthony’s previous post on this subject
CAISO Historical Daily Data (1 year)
Latest California Public Utilities Commission (CPUC) Report
CA Renewables Portfolio Standard (RPS)
Here is the CAISO home page: http://www.caiso.com/outlook/SystemStatus.html
today is a cool day, and peak system demand is only about half what it will be in the summer. As solar takes over more and more of the burden of meeting daytime demand, the facilities that provide base load will be called upon less and less to contribute to daytime capacity; they’ll require less maintenance and last much longer. California will continue to have a surplus of base generating capacity, and solar for peak demand will thus contribute to base capacity for a long time into the future.
Is not every watt of electricity generated fungible? How can wind or solar produced watts be segregated from all of the non-renewable sourced coal and natural gas produced watts once they reach the transmission lines? I know, the wind and solar watts cost more.
The entire concept of renewable energy quotas is a fiction with ruinous consequences. Electricity already costs 50% more in CA than the average cost for all other states.
Thanks for the updated numbers Willis.
It looks like non large hydro renewables are up to 17.9% in 2010 from 13% in 2008.
Note the deficcit of 6492 GWH that they are running from the expected target. They defintely have a steep hill to climb if they do not plan to use large hydro in their accounting to reach 33%. But maybe they can make it. It will be expensive.
Willis wrote this: Also, the idea that solar is “cost competitive with electricity from gas turbines, for peak generation” screams for a citation. At this point, I don’t believe it one bit. If that were true, everyone would be switching to solar, and they’re not. I’m putting it in the “dream on” file until you come up with some data to back it up. I suspect you are conflating “fuel cost” or “marginal generation cost” with “total running cost”.
I’ll get you a citation. It was a recent contract let by the City of Los Angeles to purchase power from a solar source instead of a new turbine facility. “Everybody” is not doing it because “everybody” does not have the insolation that Los Angeles has. And it is for peak power, which makes it more expensive to amortize the cost of the gas turbines. This is something to continue to follow in the future, as it will be happening more and more often as the price of solar continues to decline.
You wrote of the transmission bottleneck in the Bonneville Power Authority. You are of course aware that there are bottlenecks in the transmission of natural gas and liquid fuel; in cold weather, the pressure in the natural gas pipelines falls, so homes and power plants receive reduced allotments; oil thickens and pumps freeze up. There are coal train derailments as well. These shortcomings are solved over time by costly investments. Besides building new transmission facilities for electricity, California has had to build new pipelines for gas. After building the pipelines for the gas, it then has to pay for the gas. But gas will continue to get more expensive (especially if it has to come from West Virginia), but solar will continue to decline in price.
Septic says:
“All costs considered, solar now is cheaper for meeting peak demand than gas-fired turbines.”
Are you saying that unsubsidized solar power is cheaper than unsubsidized natural gas power, taking into accout the huge amount of land space required for solar? If so, please provide a citation with a breakdown for all associated costs.
And that still doesn’t get around the fact that solar is unreliable. It may help with air conditioning costs during the daytime in summer, but it is useless for helping with evening/nighttime heating and lighting costs. Natural gas provides power 24/7/365.
All in all, solar is a weak sister to high energy density, reliable fossil fuels. Without heavy taxpayer subsidies, solar would have only limited use in areas where there is no alternative.
Finally, “everything else is getting more expensive” because of government policies, such as an almost complete drilling ban. There is enough fossil fuel available to drastically reduce the cost of energy. But the government is controlled by anti-American eco-zealots intent on barring the extraction of any fossil fuels – while China drills for oil 30 miles off our coast.
Paddy wrote: Is not every watt of electricity generated fungible? How can wind or solar produced watts be segregated from all of the non-renewable sourced coal and natural gas produced watts once they reach the transmission lines? I know, the wind and solar watts cost more.
First question, the answer is “no” — read Willis’ comment about the competition of wind and hydro for transmission. It’s only fungible once it gets into the grid, and even then there are transmission losses if electricity actually is transmitted long distances.
Second question: the electricity comes into the grid on large trunk lines that are metered, and that originate at the power plants; the electricity goes out to the electricity retailers on large trunk lines that are metered. But CAISO has no metering that can measure the generation from rooftop solar panels or home-based wind turbines (not that there are many of these.)
Septic Matthew says:
April 15, 2011 at 11:40 am
California should have no trouble meeting its renewable energy standard in 10 years.
Does that mean Californian’s will come and collect up the 4 GW of Californian Owned windmills in Washington and Oregon that have destroyed our most scenic vistas?
Smokey says: And that still doesn’t get around the fact that solar is unreliable. It may help with air conditioning costs during the daytime, but it’s useless for helping with evening/nighttime heating and lighting costs.
at the risk of repeating myself, let me remind you that we are writing now of California, and peak demand matches peak insolation. Air conditioning alone uses up 15% of summertime peak electricity, which is the most expensive electricity. Like solar panels, the gas turbines that are used to produce peak electricity are idle at night. Their extra “reliability” entails an extra cost that is of no value to electricity consumers, yet must be paid for.
Smokey also wrote: taking into accout the huge amount of land space required for solar?
This won’t matter until all the roofs, water ways, roads, and parking lots have been covered, along with the land between the trees in orchards. Only a tiny fraction of California land is required to supply all of California’s electricity, and much of that is desert. Per MW of power, solar consumes less land than hydropower.
Septic tries to counter Willis’ point by saying, “in cold weather, the pressure in the natural gas pipelines falls, so homes and power plants receive reduced allotments; oil thickens and pumps freeze up. There are coal train derailments as well.”
Arguments like that probably get the heads nodding at realclimate, but they fail here at the Best Science site. It’s not even worth wasting the pixels to correct Septic’s misunderstanding of science and economics.
In its own good time solar would probably have become viable. The objection is over requiring asinine alternative power sources while regulating out of existence efficient new sources of power, including fossil fuel plants, refieries, and nuclear power.
Free market econ in one lesson:
You’re welcome.
Harrywr2 says: Does that mean Californian’s will come and collect up the 4 GW of Californian Owned windmills in Washington and Oregon that have destroyed our most scenic vistas?
No. It means that California will pay for the electricity. Washington State and Oregon State probably have the legal authority to tear down the windmills should the citizens vote to do so. They have a good case, should they so decide: the turbines are only there because Californians object to erecting them in California.
It is an irony not yet touched upon that Californians object to building the facilities to enable California electricity retailers to meet the renewable energy standard. Check out http://www.basinandrangewatch.org for one of the organization that is opposed to the Mojave Desert projects.
Smokey says: “Arguments like that probably get the heads nodding at realclimate, but they fail here at the Best Science site. It’s not even worth wasting the pixels to correct Septic’s misunderstanding of science and economics.”
Every power source is subsidized one way or another. Many of the railroad rights of way were obtained by federal land grants. The regulations of coal-fired power plants are attempts to bill users for the external costs (deaths and illness due to pollution) of coal. Patent protection, which is a blatant restraint on the free market, is written into the Constitution, etc. (N.B., this is not a criticism of patent protection, but the world’s fastest growing nearly free market economy, China, does not recognize patent protection.) No free market has ever existed.
In case you are wondering, a “septic” is a “skeptic” on climate change who asks the same questions or makes the same anti-AGW points over and over. I generally write disagreeable posts at Real Climate.
The UK admits that solar is uneconomical. Without subsidies, solar dies on the vine.
With sufficient government subsidies, we could hire folks to pedal bicycles hooked to generators to provide alternative energy. The key to whether it’s a good or a bad idea is whether it requires subsidies to stay in business. Solar requires taxpayer subsidies. Fossil fuels do not; they are viable with or without subsidies.
Here is the news item that I promised to Willis a while ago:
http://cleantechnica.com/2011/02/01/sce-buys-20-years-of-solar-power-for-less-than-natural-gas/
It was Southern California Edison, not the City of Los Angeles (which has its own program of roof-top and parking lot solar installations, and operates its own power supply independent of CAISO — well, they are interconnected so LA generally sells power to CAISO, which CAISO accounts as “imports”), and it was only a 250 MW installation.
That web site is run by AGW fanatics, but most of their sources are “reliable”, though no source is perfect. The source for that is an SCE announcement of a contract award. When all the books are opened in 3 years, it may turn out that there was a problem. There are other sources for the claim that solar electricity is now cheaper than gas electricity in high insolation areas. Since gas is getting more expensive in places where it has to be delivered, and since solar is getting cheaper, we should see lots more of these.
Smokey says: The UK admits that solar is uneconomical.
That’s interesting, but today we have been discussing California.
A question about the meaning of “subsidies”. People die and are made sick from the combustion of coal, and the U.S. military guards the international shipping lanes for petroleum. Some people count these as subsidies and some people do not. If their costs are included in the costs of coal and petroleum, coal and petroleum lose much of their otherwise competitive advantage.
But I think that we have begun to repeat ourselves.
We shall have to revisit this discussion in 5 years.
Septic says:
“Since gas is getting more expensive in places where it has to be delivered, and since solar is getting cheaper…”
I don’t think natural gas is getting more expensive, because there is a huge amount coming to the market due to the newer frakking technologies.
And I don’t think the current subsidies for solar are sustainable. Spending bills originate in the House of Representatives, which is unlikely to propose nearly as much eco-spending as the last Congress.
Septic Matthew is what I call a Marxist Tarbaby. Every response to him increases his power.
I continue to see “quotes” and “studies” showing unsubsidized solar to be be somehow even remotely competitive with combined-cycle-natural-gas generation (or any other form of power generation known to man). Such claims are utterly ludicrous. Anyone interested in the facts should get out their financial calculator and walk through the following exercise:
Here is reality:
1) The turn-key capital cost of a combined-cycle, natural gas fired, gas turbine plant is $550/kw of capacity: go to http://www.cogeneration.net/combined_cycle_power_plants.htm
2) The conservative capacity factor of the turbine plant is 92% (they actually do better than that in my experience, but I’ll accept 92%).
3) The capital cost per kw of USEABLE capacity for the turbine plant is $600 ($550/0.92)
4) The turn-key capital cost of a large-scale photovoltaic solar is plant is $6,000 per kw of capacity (I’ve previously provided tons on that subject).
5) The “best case” capacity factor of solar is 25% (ditto info note above – also note the latest Mojave Desert plant claims 24%)
6) The capital cost per USEABLE kw for the solar plant is $24,000 ($6,000/0.25)
For this simple exercise, I am going to ignore O&M expenses, land costs and a host of other factors that favor the gas turbine over solar and focus on only two items: 1) The cost per kwh to service a project loan and 2) Fuel cost
I will assume a 100% leveraged loan with a term of 15-years at an interest rate of 5% compounded annually (lots of luck getting either that term or that rate for solar without government guarantees – most of our P.E. alternate energy loans were for a term of 10-years). I will assume a current natural gas price of $5.00 per mmbtu (even though it is not that high).
Capital Cost Per kwh for Solar (get out your HP financial calculator)
PV = $24,000, i = 5%, n = 15
Therefore: Annual loan payment = $2,202 for each useable kw of capacity
Capital cost per kwh = $2,202 per kw/year / (365 days/year x 24 hrs/day) = 25.14 cents/kwh
Capital Plus Fuel Cost Per kwh for CCGT (at $5.00/mmbtu natural gas)
PV = $600, i=5%, n = 15
Therefore: Annual loan payment = $55.05 for each useable kw of capacity
Capital cost per kwh = $55.05 per kw/year / (365 days/year x 24 hrs/day) = 0.63 cents/kwh
Fuel cost per kwh = 5,690 btu/kwh x $5.00/ mm btu = 2.85 cents/kwh
Total capital and fuel cost = 2.85 cents + 0.63 cents = 3.48 cents per kwh
Lets look at the 15 year end point for these two plants and assume gas prices have escalated at a rate of 5% per year
Solar capital (sunk) cost per kwh is still the same at 25.14 cents per year
CCGT capital (sunk) cost remains the same at 0.63 cents/kwh
Natural gas price has now escalated to $5.00/mmbtu x (1.05 raised to the 15th power) = $5 x 2.08 = $10.40
Fuel cost per kwh = 5,690 btu/kwh x $10.40 /mmbtu = 5.9 cents
Total capital and fuel cost = 5.9 cents + 0.63 cents = 6.53 cents per kwh.
Any who think that solar plant is “free power” once the project loan is repaid are smoking their own dope. A plant utilizing that much electronics (solar panels, positioning and tracking circuitry, dc to ac conversion circuitry, power flow conditioning circuitry, etc.) will be completely used up in 15 years. Try and think of any computer, video, or automotive electronic system that lasted that long.
Even if the solar plant lasted 30 years, the discounted cash flow stream would be dwarfed by the “front-end” cash flow advantage of the CCGT plant.
The U.S. experience has, without any ambiguity, demonstrated that at current natural gas prices CCGT plants can be built and operated in the range of 4 cents per kwh.
The German and Spanish experience has demonstrated, without any ambiguity, that photovoltaic solar plants cannot be built and operated for anything less than 40 cents per kwh and there is considerable evidence that the figure is more in the range of 50 cents.
DO THE MATH!
CH
Theo Goodwin says: Septic Matthew is what I call a Marxist Tarbaby. Every response to him increases his power.
Would it were so.
Septic Matthew says:
April 15, 2011 at 1:35 pm
Many thanks, Matthew. I took a look and I see that solar is not actually cheaper than other fuel sources as you had implied. What it is is cheaper than is the “Market Price Referent”. This is not an actual price for which someone is supplying electricity to a power company. It is a totally theoretical number. And this being California bureaucrats, I don’t trust it a bit.
As you point out, it is about $0.11 per kilowatt.
Per the EIA (Excel spreadsheet), in 2010 the nationwide average retail price per kilowatt-hour (KWh) for electricity was
Residential: $0.11
Commercial: $0.10
Industrial: $0.07
This means that on average, the people who are selling the power for those retail prices are buying it for something on the order of $0.04 or $0.05 per kilowatt-hour for their baseline power, and perhaps $0.07 or $0.08 for their peaking power. Otherwise they couldn’t sell it for $0.07 per KWh to industrial customers and $0.11 to residential customers.
So I say the Market Reference Price is nonsense cooked up by California bureaucrats. They claim it’s the breakeven price for new CCGT (combined cycle gas turbine) power … but if that were true, electric power would be a whole lot more expensive. CCGT is either equal to or slightly cheaper than coal fired plants. I don’t believe the California numbers, if they were true the nationwide average retail price for industrial power couldn’t $0.07 per KWh.
Which in turn means I’m still not impressed with solar. Matthew, the only reason that San Diego is buying that solar power is BECAUSE THEY HAVE TO under , not because it is cost competitive. Otherwise, they’d buy power for half the price or so and not worry about the headaches that come with solar. All they’ve done is beat the MRP, that doesn’t make them cost competitive.
w.
Oh, yeah. Forgot one thing:
What Claude Harvey said above.
Do the math.
w.
Note that only about half, often less, of the average residential electric bill is for “energy”. Current spot and day-ahead electric energy in the U.S. is in the range of 4 cents per Kwh (see NYMEX). The remainder of that bill is for transmission, distribution and other utility fixed costs. The numbers I calculated in the CCGT versus solar cost exercise were “energy costs at the plant fence” and did not include all the other components that go into the typical electric utility bill.
The California Energy Commission is notorious for cranking out numbers designed to please the politicos on Sacramento. One of their recurring stunts is to compare technologies SOMEWHERE OUT IN THE IMAGINED FUTURE. Since that future is theirs to imagine, they place unrealistic escalators on the disfavored technology (natural gas price, for example) and unrealistic assumed future cost reductions for favored technology (solar capital costs, for example). The end result APPEARS very rigorous and scientific, but as we’ve all learned from the AGW example, “garbage in gets you garbage out”. This country is awash in natural gas thanks to the newly developed horizontal drilling techniques.
Willis wrote the following: So I say the Market Reference Price is nonsense cooked up by California bureaucrats. They claim it’s the breakeven price for new CCGT (combined cycle gas turbine) power … but if that were true, electric power would be a whole lot more expensive. CCGT is either equal to or slightly cheaper than coal fired plants. I don’t believe the California numbers, if they were true the nationwide average retail price for industrial power couldn’t $0.07 per KWh.
You have missed an important point, one that most other people here have missed as well. The SCE contract (NOT incidentally, SCE is an investor-owned retail utility; Sacramento and Los Angeles have city-owned electrical power supplies) is for power for peak demand in summer, and the price is inflated (compared to national and California averages) by the fact that the electricity will only be sold for 8 hours per day or so, and hardly any will be sold in the fall, winter and spring.
I don’t know how often I have to repeat this: solar power is cost-competitive in California for meeting peak demand; however, 15% of peak demand is for air conditioning, and for that use the solar production curve matches the demand curve.
Looking forward, solar power is getting cheaper, whereas fossil fuels are getting more expensive.
Now that you know about CAISO, follow the daily consumption/production curves all summer long. Peak daytime demand increases far more than nighttime demand. Most electrical generating capacity in California is idle or at low output most of the time.
And a final word about external costs: electricity rate payers do not pay indemnities or medical bills for the deaths, dismemberments and diseases that result from the mining of fossil fuels and from their burning. That does not mean the costs are not there. Rate payers also do not pay the costs of deploying the military to the Middle East. That does not mean that those costs are negligible or unrelated to oil.
Septic Matthew says:
April 16, 2011 at 8:47 am
I don’t know how often I have to repeat this. Making claims without citations is useless. You have claimed that solar is cost-competitive in California for meeting peak demand. You have not demonstrated that. You have not given us the price for peaking power, just claimed that solar is cheaper.
Both Claude and I have shown that power is available, from a variety of sources (both baseline and peaking), for much less than the numbers you are claiming. I see nothing in your citations that says that the solar you are discussing can beat peaking prices, just the bogus Market Price Referent. You seem to be very impressed that the utility can buy solar power at 11 cents a kilowatt-hour … when all over the county they are buying fossil power for under half of that. Wake up and smell the price structure, my friend.
Merely repeating your claims doesn’t help. So when you say “I don’t know how often I have to repeat this”, you’ve missed the point. Repeating an unsubstantiated claim a thousand times won’t help, we’re not into “proof by repeated claim” around here.
w.
PS – Just found the EIA sheet showing wholesale prices (Excel spreadsheet). According to the EIA, the most recent California wholesale day-ahead price for peak power is just under four cents per kilowatt hour … so I’m sorry, Matthew, but your solar at $0.11 per KWh still doesn’t impress, and your claim that it is cheaper than the cost of peak power is rudely contradicted by the facts.
PPS – Due to ecoloonies insisting that California use solar and other inefficient technologies, the price of electricity in California (retail average 13.6¢/KWh) is more than twice that of Utah or Washington or other surrounding states. While this seems not to be a problem for ecoloonies, it is for me, and it definitely is for businesses in California.
Willis Eschenbach says:
April 16, 2011 at 10:47 am
According to the EIA, the most recent California wholesale day-ahead price for peak power is just under four cents per kilowatt hour
Willis, peak prices don’t occur in April they occur in August.
At the moment load on the Bonneville Power Grid is between 6 and 8 GW. The Hydrodams are pushing out between 10 and 12 GW. We have about 1 GW of thermal running. The net effect is we are exporting about 4GW to somewhere.
http://transmission.bpa.gov/Business/Operations/Wind/baltwg.aspx
BPA is required by law to sell power at cost. So as long as the PNW has power to spare California ‘peak load’ wholesale rates are reasonable.
Come August BPA will have no power to spare. So your California ‘peak load’ providers will have an opportunity to make their annual budget in one month.
California summer ‘peak load’ is around 50 GW where your daily load fluctuation in the spring is between 20-25 GW. Maintaining 25GW of natural gas fired plants that only run one or two months a year is pricey.
Harrywr2 says:
“Maintaining 25GW of natural gas fired plants that only run one or two months a year is pricey.”
Well then, the obvious answer is to run them 24/7/365, and forget all the inefficient, feel-good, expensive Mickey Mouse alternative energy schemes.