Guest Post by Willis Eschenbach
I will take as my departure point the following rather depressing chart from the US Energy Information Agency (EIA). It shows the rise in US electricity prices since 2001:
Figure 1. Increase in energy costs for the industrial, commercial, and residential sectors, along with the average, from the EIA. SOURCE
That is a 50% increase in electricity costs in about a decade, and as you can see, we’re getting shafted. Now, it may be that the advent of “SmartMeters” is responsible for the decoupling of the different types of rates in 2009. I say that because residential has continued to increase post 2009, while commercial and industrial have stayed about level. But that’s just a guess, and coupled or not, prices are way up.
I got to thinking about that, and about the difference in the price of electricity from state to state, as shown in below in Figure 2. I wondered how much of the state-to-state differences in prices was due to the different mixes of fuel.
So I went and got the data, and as usual, there are some surprises in the mix.
Figure 2. State by state electricity pricing, 2010. SOURCE
To understand the relationship of price to fuel mix, I used the data from the same source as Figure 1, the EIA (I downloaded “All Tables” from the top section of that link, which simplifies the process). They have individual tables which contain state-by-state information on the various fuel sources used to generate electricity. They divide these up as Coal, Petroleum Liquids, Petroleum Coke, Natural Gas, Other Gas, Nuclear, Hydroelectric Conventional, Other Renewable Sources, Hydroelectric Pumped Storage, and Other Sources. “Other Renewable Sources” in turn is broken down into Wind, Biomass, Geothermal, and Solar.
So after looking at all of those various fuel sources for electric generation, it turns out that you can actually get a fairly good handle on the state-by-state price using just four of those variables, and that the rest of them make little difference to the result.
Figure 3. Estimated state prices compared with actual prices, with the percentages of coal, hydro, nuclear, and biomass being the variables used to estimate state prices.
So what is the relationship between pricing and fuel? Here’s how Figure 3 was calculated.
You start with the average price, 13.25 cents per kWh. Then, you subtract five cents times the percentage of coal in the state’s mix.This drops the price by up to 4.6 cents, because as you might expect, coal plants are inexpensive. So if for example half your state’s power is from coal, on average that reduces the electricity price by 2.5 cents.
Next, you subtract five cents times the percentage of hydroelectric in the mix. Again, that reduces the average price, this time by up to 4.5 cents … hydro is cheap power as well.
So those two, coal and hydro, reduce the cost of electricity. Then you add three cents times the percentage of nuclear, which increases the price by up to 2.1 cents.
Finally, we have the other variable that increases the price, biofuel. Biofuel seems to be pretty deadly to a state’s electrical mix. It increases the cost of electricity by up to 5.3 cents per kWh, and is calculated by adding 34 cents times the percentage of biofuel.
The rest of the variables, wind and natural gas and all of the others, have only a very small effect on the state-by-state price. I suspect that the effect of natural gas in the mix will strengthen as the price drops and more plants are built … but for now, those are the variables that actually make a difference—coal and hydro drop the price, and nuclear and biomass increase the price.
Conclusions? … if you want cheap electricity, go with coal and hydro. And if you get desperate enough for renewables that you start messing with biomass and burning wood to make electricity? Well, you’re in deep trouble … and sadly, California, where I live, is a leader in that regard.
Which in part is why electrical prices here in California are through the roof. We have a draconian renewables target (33% renewables by 2020!!), and in a fit of chronic stupidity the lunatics in charge of the asylum decided NOT to count hydroelectric as a renewable. So we’re burning wood for electricity, and if the madness continues we’ll likely have to burn the furniture as well … and as a result of the 33% renewables target, plus the madness of denying that hydroelectric power is renewable, California ends up a “red state” in Figure 2, and my electric bill keeps rising.
That’s your electricity report on this fine morning, US Independence Day.
My best to everyone,
w.
[UPDATE] In the comments someone asked about the correlation between a state’s voting habits and its energy prices. I actually had started in that direction, and prepared a graph, but then I decided to make the post about the fuel rather than about the politics. However, since someone asked … read’m and weep …
[UPDATE 2] USA Today sez …
WASHINGTON — As President Obama pushes an aggressive national climate-change plan, his administration’s non-profit advocacy arm is becoming active in clean-energy drives across the country.
Organizing for Action also has formed a partnership that steers its volunteers to purchase wind and solar power from a single company with ties to liberal groups.
“While we are doing all of this work to advance the president’s agenda in Congress, we also want to do everything we can locally to help switch to clean energy,” said Ivan Frishberg, Organizing for Action’s climate-change manager.
Organizing for Action, for instance, will recommend that its volunteers and activists who want to purchase renewable energy for their homes and businesses consider signing up with Ethical Electric, a firm that currently sells wind power in four Mid-Atlantic states and the District of Columbia and bills itself as a socially responsible energy supplier. It also has licenses that will allow it to expand to New York, Massachusetts, Illinois and Ohio.
…
Meredith McGehee, who examines government ethics at the Campaign Legal Center watchdog group, questions whether it’s appropriate for an organization so closely linked to a sitting president to develop ties with one business.
“You can say that developing clean energy is great, but do competitors feel the weight of the presidency being used to undermine their business model?” she said. “It raises questions about the ethical propriety of the use of the president’s bully pulpit.”
Putting all the money in your friends’ pockets raises ethical questions? Who knew?
So … as usual, the friends of Obama make bank, and everyone else says “How come the US government is favoring the President’s friends?”
That is just one of the many, many ways we are screwed in California….
California is already a red state. There are reds all over the place, regulating and snooping and taxing with all their might.
And this shows the intent of the “greens” to change our lives. For the worse,IMO.
The question is ,will we do anything to resist?
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on my last visit to CA I saw no one with solar geysers on their roofs.How stupid is that if you have so much sunshine?
we have a lot here.(south africa)
I have one.
solar geyser works like an inverse radiator
coal is bad, not for the CO2 but because of other poisons
nuclear is not safe
so better go with CH4 (fracking)
There is a more detailed analysis of these same questions available, including wind/solar and a discussion of externalized costs (http://tinyurl.com/cueeunz), indicating that:
With San Onofre going out of service and California buying “Green” replacement power, expect even higher prices. I have lived in Anaheim and the Phoenix area and when the power company starts talking about how they are greening the power mix, expect your power bill to go from 11 cents to 14 cents a kilowatt. With a smart meter, expect them to start bribing you to turn off your air conditioner midday. It’s nice to know that your utility is thinking about the comfort of the ill senior who is living with you.
nuclear is not safe. Henry P
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All solar, wind, hydro and biomass fuel is nuclear fuel (the Sun). Are you not going to use these fuels simply because the Sun is a dangerous nuclear source? (UV radiation, CMEs, radio disruption, electrical grid disruption, climate disruption etc, etc,)
We are not going to get to Mars with woodchips, or even with fracking. We need nuclear, and we need it now (or yesterday), and so the answer is not to reject it, but make it safe. You have all heard of the advantages of Thorium power, so why are our dumb legislators so ignorant of it?
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California was voted “state that would most benefit from experiencing a zombie apocalypse” in 2013
Actually, I think there may be a way to make money from bio-fuels. Sell your wood pellets to us Brits so we can burn it in converted coal plant (Drax in this case) and claim that it’s green. If in 20 years time you ever wonder where all your trees have gone, we’ve burnt them for you.
Ohh the insanity…
I’m somewhat surprised that nuclear increases the retail cost of electricity. Does anyone know the reason, or is it one of those cases where correlation doesn’t equal causation?
No wonder businesses are fleeing the sunshine state.
KR says:
“…coal-fired power is more expensive than all the other generation types we examined.”
Who let KR out of the asylum?
HenryP says:
on my last visit to CA I saw no one with solar geysers on their roofs.How stupid is that if you have so much sunshine?
If you have natural gas, heating water and your house cost very little. The costal regions of California receive less sun than you might think because of high level fog blocking the sun. California did experiment with first generation modern solar heat and most people were unhappy with the results. Much new construction included pipes for latter solar devices but for the above reasons, most remain unused and I even saw some ripped out when they redid the roof.
Now in Arizona I have a all electric house and have seen much higher cost because of the lack of natural gas. I would consider solar but my roof faces the wrong way, HOA restrictions and no back yard to speak of. Besides that, a tile roof is something you don’t want to play with if you want to stay dry.
coal is bad, not for the CO2 but because of other poisons. Henry P
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Actually, coal is good. Coal took us from the pre-industrial age, to the technological age, and into an era of unprecedented health, wealth and luxury.
Of course you could counter that the Romans achieved the same levels of health, wealth and luxury back in the 1st to 4th centuries AD. But I would be forced to remind you that they did so on the back of hard, forced labour – slavery. Perhaps you would prefer slavery to coal? Your choice.
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Generation cost isn’t the whole story on electricity cost, at least here in Connecticut. We pay 6.3 cents per kwh just for transmission; cost of generation is added to that. To analyze fuel type vs electricity cost it would make some sense to first remove transmission cost, even though wind and solar may inflate this too. In fact it would also be interesting to see how transmission costs are impacted by renewables.
Most of your country has ‘leccy prices to die for. I currently pay @ur momisugly 21 cents after ‘shopping around’ the UK for the ‘best available’ price.
In CA, the Renewables Portfolio Standard doesn’t include big hydro, so it won’t be part of the 33%. Hydro suffers from variability of rainfall, consequently the percentage of hydropower per year has large swings. Nuclear power has an advantage of very high capacity factor, and these plants produce power over 90% of time. There are many stupid things we do with nuclear, largely because of military and industry decisions. It could be done much better, and would give us a solid basis for an economy over several centuries. Short answer, build integral fast reactors.
Wind and solar are still mostly negligible. Texas had cheap power until it because the leader in wind generation capacity after which power prices went up by 50%. Wind and solar do have a huge impact on land usage. San Onofre produced about 4% of CA power needs on a small land area. 24 of them could produce 100% of our power needs on a total of 3 square miles of land. Producing 10% of our power with wind generators would require 2500 square miles of ocean, because we don’t have that amount of land with class 5 wind speeds.
We would need 20,000 1.5 MW generators and cabling built to withstand salt corrosion, from the Oregon border to Santa Barbara from just off shore to 5 miles out to sea. Each wind turbine requires about 60 acres of space for separation. Spacing prevents multiple failures if one sends its blades flying up to 1/2 of a mile.
Solar is beginning to use up farmland and water because of the RPS. Water is needed to clean the solar panels. Again, a horrible opportunity cost.
By the way, Anthony, I hate the tiny typing window we get now.
Hi Willis
Decline of US$ is partially to blame.
http://www.vukcevic.talktalk.net/EuroDolarEnergy.htm
This is not an exact calculation but simple superimposition of two graphs is informative.
Oh, yes, and expect time-of-use metering shortly thanks to that smartmeter. If we just had a whole-house UPS, we could grab power when it was cheap, and use it when it was expensive. We hardly use the generation capacity we have from 10pm to 6am. We use roughly half of our capacity during 24 hours.
Thanks for cheering me up Willis!
Like Henry, I pay about 21 cents here in the UK. This is actually cheap (!) compared to the green wonderland in Germany, where their prices are 68% higher still!!
http://notalotofpeopleknowthat.wordpress.com/2013/06/17/in-germanys-green-wonderland-electricity-costs-68-more-than-ours/
not sure why Texas is so high, since the supply is here, but there’s almost no hydro (we missed out on the mountain ranges) and a limited amount of coal. Plus, there’s a whole lot of fairly remote areas that have high cost service which gets averaged in.
Trend looks flat since 2008
Quick question Willis, it’s not clear to me whether the breakdown by fuel type refers to generation within the state or fuel consumed within the state regardless of where it is generated, any idea? I suspect for NJ these would likely be quite different.
@Willis:
A) California is crazy. What happens to your formula if you omit CA?
B) Is the high cost of “nuclear involvement” related to plants closed prematurely because of anti-nuclear protests? These states might still be paying down the bills for these plants. I was looking for such data but couldn’t find it.
As a soon-to-retire division manager for a municipal electric utility here in California, I have had plenty of exposure to the madness of renewables. Many of my colleagues are rabid warmists, as unwilling as any of their stripe to listen to evidence contradicting their dogma.
Willis, I don’t see in your post any reference to the fact that as it is, at least half of the costs of renewables installations and operations are paid by various kinds of taxpayer subsidies. Electric rates would be somewhere between 80 cents and $1.10 per kilowatt-hour (depending on the kind and location of the installation) for renewable power if the entire cost were paid for directly by ratepayers. What you would have is a rate of about 8 cents for the 2/3 of the power that comes from fossil fuels, and up to $1.10 for the other 1/3 – which, using the $1.10 figure, gives an average rate of about 42 cents/kWh. The difference between this and the published rate is effectively paid by the taxpayer.
As for “free” power, the huge swaths of land needed for renewables are not free, nor are the extra transmission lines, switchyards and buses that have to be built – and not to mention the cost of the turbines and panels and the extraordinarily high costs of maintaining them. Those costs add up very fast.
And of course this doesn’t take into account the environmental wreckage wrought by wind turbines and solar panels. What cost do we assign to despoiled landscapes, poisoned habitats, dead California condors (at least five killed by the turbines at Tehachapi), whooping cranes (population reduced by half by turbines along their migration route), and English swifts (on the brink of extinction because of wind installations in the UK)?
Let a duck drown in an oilwell sump, and the fines run to the millions – while the green murderers of endangered species get a free pass from the EPA and its UK equivalent.