Guest Post by Willis Eschenbach
For this post I’ve taken as my departure point a couple of very interesting graphs from over at Not A Lot Of People Know That. I’ll repeat them here:
(NOTE: I’ve been informed in the most genteel and lovely way that I’ve not given full credit for the source of these graphs. As the lower graph notes, they are from the Strom Report, Source: Strom-Report. My thanks to them for the heads-up.)
Interesting, no? But I’m a numbers guy, I wanted to actually analyze the results. Using the data from those posts and adding the US information, I graphed the relationship … Figure 1 shows the result:
Figure 1. Electricity costs as a function of per capita installed renewable capacity. Wind and solar only, excludes hydropower. [Updated to add Australia and correct the units]
That is a most interesting result. Per capita installed renewable capacity by itself explains 84% of the variation in electricity costs. Not a big surprise given the crazy-high costs of renewables, but it is very useful for another calculation.
Today, President Obama said that he wanted 28% of America’s electricity to come from renewable energy by 2030. He has not detailed his plan, so I will assume that like California and other states with renewable targets, and like the EU graph above, hydropower is not included in counting the renewables, and thus the energy will have to come from wind and solar. (Why? In California, they admitted that hydropower was excluded because it would make it too easy to meet the renewable goals … seriously, that was their explanation.)
Currently, we get about 4% of our electricity from wind and solar. He wants to jack it to 28%, meaning we need seven times the installed capacity. Currently we have about 231 kW/capita of installed wind and solar (see Figure 1). So Obama’s plan will require that we have a little less than seven times that, 1537 kW/capita. And assuming that we can extend the relationship we see in Figure 1, this means that the average price of electricity in the US will perforce go up to no less than 43 cents per kilowatt-hour. (This includes the hidden 1.4 cents/kW cost due to the five cents per kilowatt-hour subsidy paid to the solar/wind producers).
Since the current average US price of electricity is about 12 cents per kilowatt-hour … that means the true price of electricity is likely to almost quadruple in the next 15 years.
And given that President Obama famously predicted that under his energy plan electricity prices would necessarily “skyrocket” … it looks like he finally might actually succeed at something.
Since this is being done illegally or at least highly improperly by means of Obama’s Imperial Presidential Fiat, there seems to be little we can do about it except to let your friends and neighbors know that thanks to Obama and the Democratic Party, their electric bill is indeed about to skyrocket … otherwise, Obama is likely to blame it all on President Bush.
Best to everyone,
w.
My Usual Plea: If you disagree with someone, please quote the exact words that you object to. That way we can all understand exactly who and what you are objecting to.
Prediction Notes: It is always dangerous to try to predict the future. In this case, we have a couple of issues. First, we don’t know if this relationship will continue to work in the future. And we don’t know if America’s path will be like that of the other countries. The good news is, the fact that there are 19 countries which differ greatly in both installed capacity and level of economic development gives some comfort.
Next, outliers. I tested to see whether it would change the trend if I removed Denmark and Germany … it barely changed. That was very encouraging, because it means that the same relationship held when we extended the data from 600 kW/capita (Spain etc.) out to about 1000 kW/capita, a projection of about 60%. Since the extension to the projected US installed capacity/capita (1000 out to 1500 kW/capita) is of about the same size, this increases confidence in the estimate.
Finally, we have to make some assumptions about US electricity use in 2030. It will increase … but by how much? Fortunately, the independent variable is installed renewable capacity per capita. This means that extending the line contains a tacit assumption that the electricity consumption will increase at about the same rate as the population. While we have no way to know if this is true, US per capita electricity consumption has been about flat for the last two decades, so it is the most reasonable assumption.
No one to blame but ourselves for voting this person in to be president, not once but twice. Can we undo the damage, possibly. But it will take great resolve and commitment. Both seem to be in short supply. Talk to everyone you know about the stupidity of this plan and its great costs to them personally. Thank you Willis for presenting the costs to this foolishness.
Your comment, my rhyme,
Seem to agree,
Obama in office,
An American tragedy!
“I’m sorry America
Obama was your choice!
Not once but twice
America used its voice
To vote in a radical,
A left wing sympathiser,
An anti-capitalist at heart,
A socialist equaliser…”
From: http://rhymeafterrhyme.net/im-sorry-america-obama-was-your-choice/
rhymeafterrhyme — nice — Eugene WR Gallun
Said it before, I’ll say it again. The correlation between the population increase and the increase in carbon dioxide is very good. Since the globalists are interested in reducing population more than carbon dioxide, making energy too expensive to advance the poorer nations as well as reducing the land used to produce food by converting to biofuel support has become the chosen “tool” to “rid the world of useless eaters.” The “green” intent has always been to push human population to something under a billion. Think about it.
Posted speed limit on Texas Highway 130 is 85 MPH, highest in the nation. Most of rural Texas is 75 MPH. The 55 MPH speed limit was horrible – I had to drive 424 miles across Kansas several times at that speed. Two extra hours in the car may not seem like a lot, but Kansas is pretty boring…
I would say that Wall Street activists (no, the white suits), may push really hard to get this. The mention of First Solar blows my mind as it is the former First Wind’s affiliate.
http://bjdurk.newsvine.com/_news/2010/02/23/3941508-who-are-these-guys-cape-wind-emi-upc-first-wind-ivpc
Now for the main article…
Why Carbon Taxes Would Be the Ultimate Energy Game-Changer
http://www.nakedcapitalism.com/2015/08/why-carbon-taxes-would-be-the-ultimate-energy-game-changer.html
On July 7, Bloomberg reported that Buffett Scores Cheapest Electricity Rate With Nevada Solar Farms:
“Berkshire Hathaway Inc.’s NV Energy agreed to pay 3.87 cents a kilowatt-hour for power from a 100-megawatt project that First Solar Inc. is developing, according to a filing with regulators. That’s a bargain. Last year the utility was paying 13.77 cents a kilowatt-hour for renewable energy. The rapid decline is a sign that solar energy is becoming a mainstream technology with fewer perceived risks. It’s also related to the 70 percent plunge in the price of panels since 2010, and the fact that the project will be built in Nevada, the third-sunniest state.”
Not a bad piece of business for a niche, i.e. thin film technology.
To put that figure (3.87 cents per kWh) in perspective, if a carbon tax were initiated at $30 per tonne (At that price, the world’s annual CO2 output would be priced at $1 trillion – approximately 35 billion tonnes x $30 — and it is hard to see how Wall Street could resist getting in on the action), a coal power plant, which emits almost 1 metric ton of CO2 per megawatt-hour, would have the same cost just for carbon as the entire “all-in” cost for PV. The coal plant also has to constantly pay for fuel. (Though, to be fair, the NV Energy price takes advantage of the 30 percent Investment Tax Credit (ITC). The ACWA project in Dubai, as mentioned, does not).
Maybe this is at the root of last year’s oil price collapse. Instead of thinking that high fossil fuel prices will someday drive customers to seek renewables as an alternative, it may be time to admit that low cost renewables, now scaling rapidly, are going to eat fossil fuels’ lunch. Yamani was right: the oil age will not end because we have run out of oil. It is probably premature to lobby for a solar depletion allowance, and it is probably past the time to justify one for oil depletion
You don’t have to be a rocket scientist to work out that heavily taxing one form of energy production whilst subsidizing another will lead to a distortion of the market.
good day to check CA ISO: http://www.caiso.com/Pages/TodaysOutlook.aspx
That excludes LA and Sacramento.
Right now (8:46am), renewables are contributing about 8,000MW out of 29,000 MW of demand. At peak, it looks like it will be about 6,000MW (wind will decline a lot) out of 39,000MW of demand. Yesterday renewables supplied 145,000 MWH out of 688,000 MWH of total demand. My electricity cost is $0.14/kwh for the electricity, and $0.03/kwh for the grid connection. I live in San Diego Co. which is one of the best counties for solar power (lots of sun, lots of undeveloped ground with little vegetation).
Don’t look at me. I didn’t vote for him.
http://memecrunch.com/meme/3F3Q9/fix-it-jesus/image.png?w=500&c=1
I have been estimating for years that the crash program of green-gadget energy doodads would triple the price of electric power. This was based on the brutally simple math of installed cost/MWh and capacity factor. I finally gave up blogging about it since I’m a world class nobody, and sites like WUWT do it so much better. But it’s still true. As an engineer in the power industry, only cringe at what these crackpot energy schemes will do to the country — not just my employment, but the whole economy as well. Only a bunch of lawyers who never held real jobs in the production economy could believe civilization is being improved with this.
Well over 50% of the leaders of the French Revolution were middle class lawyers too…
And the poor got a whole lot lot poorer during those chaotic years, due their inability to govern.
Well, at least the price of oil and gasoline is coming down again – no thanks to the US administration:
http://www.bloomberg.com/energy
There ain’t enough private savings to accomplish this by 2028.
We cannot finance it via the FED buying bonds of the “power companies” assigned the projects…er I mean the power companies that win the competitive bids… without losing an economy destroying inflation.
There isn’t enough undeveloped hydro to fill the bill, and the environmentalists would never allow it anyway.
The environmental costs of producing 28% of delivered energy with renewables like wind and solar, with their capacity factors of about one-sixth, would be enormous.
If “Don K” likes to drive at 55mph that is his business, but I recall long trips in the West at that speed and I want nothing to do with it again. An interstate speed limit of 55 mph is a productivity killer. Period. Especially nowadays with so much inventory being kept on 18 wheels on highways.
Darn…”loosing” not “losing”.
You were right the first time….
Sorry, you were right the second time, and I was wrong the first time…
@Kevin Kilty,
True. When Eisenhower created the interstate transportation system in the 1950s, he used public money—”government-created money” that Congress approves in session—paid to private sector vendors. That’s how the federal government creates jobs. The vendors have to hire people.
Since Obama and this Secretary of the Treasury, Jacob Lew—one of the architects of the 2008 Financial Crisis, unbeknownst to everyone—have no clue it works this way.
Not true. The Federal Reserve never “finances” public works. Not ever. All federal government spending must be approved by Congress, and the US Treasury tells its banker, the Federal Reserve, to mark up its General Account in that amount with keystrokes.
The Fed only buys corporate bonds or (people’s or institutions’) treasury securities on the open market when it wants to control the amount of money swilling around in the real economy. Buying them reduces the amount of money available in the real economy. That’s how the Fed controls the interest rate, and inflation. The market doesn’t control the interest rate no matter what the bubbleheads on TV or know-nothing Congressmen claim. All interest profits made by holding those corporate bonds or treasury securities are returned annually to the creator of the currency, the US Treasury, effectively ‘destroying’ the money (the US Treasury makes more with keystrokes). In 2012, the Fed returned $100 billion in interest profits.
When there is more money swilling around in the real economy, strong consumer demand for goods and services can help drive inflation. That’s because if there is a limited number of goods or services in the market, but a large demand for them, prices increase.
We recapitalized the banks via the mechanism I described–the FED buying bad assets. I am simply explaining why the same mechanism could not be used to finance projects for which there is insufficient private savings with creating very destructive inflation.
try ‘setting loose’!
‘loosing’ has bad connotations these days 😉
Willis, an interesting post. To see if the U.S. is really going down that road it may help to do the same analysis by state, comparing US states in the same way EU countries are compared. I suspect that states with the highest average incomes will have the highest electricity rates and the most renewable energy. It’s a folly of the rich, this green energy stuff, nothing more.
Further to my previous point it looks like Serbia is the most efficient EU country at adding capacity without increasing costs. The less money you have the further your renewable energy investment goes.
The data for the price of electricity given in this report is misleading.
The International Energy Association (IEA) report; “Key World Energy Statistics” for 2014 in section 5 page 43 in units of USD/MWh:
169.32 387.63 Germany
119.62 393.93 Denmark
68.20 121.16 United States.
The First column is the industrial cost, and the second column is the household cost. I think someone has been fiddling with the data!!!
Let us not forget that the first Gigawatts of renewable power generation are put in the best places. There are only [so many] GW you can install in NW Texas and Kansas. So the 100th GW installed isn’t going to be a profitable as the 1st GW.
Wind Map (that is one cool web graphic!) http://hint.fm/wind/
See Map “5) Wind power is surging in the Midwest and Great Plains” in http://www.vox.com/2015/7/29/9066685/coal-oil-solar-maps
“11 maps that explain energy in America” – Brad Plumer on July 29, 2015
Interesting graphic for comparison
http://www.eia.gov/todayinenergy/images/2015.03.16/realnominal.png
Obama may finally secede? Please, no war between the States to stop him.
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Mike M. (period) August 3, 2015 at 10:17 am
Thanks for the thought, Mike, but QUOTE WHAT YOU ARE TALKING ABOUT!! I’m not going hunting for anything. If you think something is wrong, stop dancing around it about it and POINT IT OUT!! Quote where I used one, and where I used the other, and TELL US WHY IT IS WRONG!!
Sorry for the shouting but this gets old. I don’t have time for snipe hunts or for guessing what someone is on about. I make this same request on every post, and people think it doesn’t apply to them. Here’s what I said:
Is that too difficult? Because if so, please find another person to bother.
w
Willis,
Sorry, my bad.
You wrote: “Currently, we get about 4% of our electricity from wind and solar. He wants to jack it to 28%, meaning we need seven times the installed capacity. Currently we have about 231 kW/capita of installed wind and solar (see Figure 1). So Obama’s plan will require that we have a little less than seven times that, 1537 kW/capita.”
If the 4% means capacity, combining that with the 231 kW/capita gives about 6 kW/capita for total capacity. I think that is about 3 times actual capacity, so it looks as if the 4% is what it sounds like: percent of production. I suppose you could argue that 7 times the production requires 7 times the capacity, but at least with wind people are getting better and better at picking sites to maximize capacity factor.
Layoffs Surge As Oil Price Outlook Remains Sober
http://www.zerohedge.com/news/2015-08-03/layoffs-surge-oil-price-outlook-remains-sober
Lately the leaders of some of the world’s biggest energy companies have been saying oil prices will remain depressed for some time – perhaps for the next five years – and now they’ve decided to cut their costs in the most painful way possible: massive job cuts.
Royal Dutch Shell announced July 30 that it expects to eliminate 6,500 positions. The announcement came the same day it reported that earnings in the second quarter were $3.4 billion, 33 percent lower than the $5.1 billion it made during the same period of 2014.
The same day, the British utility Centrica said it plans to cut fully 6,000 jobs and reduce the size of its division for producing oil and gas. The day before, Chevron Corp. of the United States expected to eliminate 1,500 positions.
And as oil producers struggle to rein in spending elsewhere in their operations, the pain is being shared by the oil service companies they rely on. The Italian energy contractor Saipem, for example, says it plans to cut 8,800 jobs in two years.
“We have to be resilient in a world where oil prices remain low for some time,” Shell CEO Ben van Beurden said in the statement. “These are challenging times for the industry, and we are responding with urgency and determination.”
It may be too early to determine whether the price of oil, which began falling a year ago, was now forcing the energy industry to go beyond cutting fat and is now gouging into the very sinew of its operations, but it’s clear that they’re convinced that other economies simply weren’t enough to keep themselves afloat.
And all because of the steep decline in the price of oil. In June 2014, its average global price was more than $110 per barrel. Now it’s around $50 per barrel, despite a brief, small spike recently that brought it up to around $60 per barrel.
The price fall began because drillers in the United States had increased oil production, mostly from shale deposits, which are more expensive to exploit. Instead of reducing its own production to help boost prices, OPEC, under Saudi leadership, decided at its semiannual meeting in November to keep production at 30 million barrels a day in an effort to make shale drilling unprofitable.
To make matters worse, OPEC members are exceeding that cap by about 1 million barrels a day. And the future doesn’t look any brighter, as Iran is expected to return to the global oil market next year, thanks to an agreement with six world powers over limiting its nuclear program.
================
The following is from 2 years ago regarding the BLS (Bureau of Labor Standards).
http://www.labor.ny.gov/stats/mls.shtm
Important Notice
On March 1, 2013, President Obama ordered into effect the across-the-board spending cuts (commonly referred to as sequestration) required by the Balanced Budget and Emergency Deficit Control Act, as amended. Under the order, the Bureau of Labor Statistics (BLS) must cut its current budget by more than $30 million, 5 percent of the current 2013 appropriation, by September 30, 2013. In order to help achieve these savings and protect core programs, the BLS will eliminate two programs, including Mass Layoff Statistics, and all “measuring green jobs” products. The final release of Mass Layoffs Statistics data will be the publication of the May 2013 data.
You mention job losses because of cheap oil and gas, but there is another side of the story, with lower energy costs there is a gain for small businesses and manufacturers. I would like to see the jobs gained by cheaper energy. I would say it’s more than a wash, but I have to admit I don’t have the figures.
Also, in Europe, has the price of fuel come down because of low retail prices, or does it remain artificially high? (fuel oil and gasoline)?
Some states have cashed in on low gas prices by raising gas taxes. With many oil/gas concerns going under due to low prices, there will be a new round of loan defaults from mortgages/credit and business loans. There will also be a shortfall of other tax revenue of which will require more BAILOUTS. That in turn results in more heavy taxation that can not be afforded due to the precious revenue stream interruption and more towns and cities will go under accordingly. No amount of financial engineering can stop this IMHO as those methods have been exhausted.
We now live in a world of of manipulated markets and line toting PR firms.
Hedge accordingly.
You might want to check this out on a daily basis.
https://twitter.com/nanexllc?lang=en
Most, if not all state and federal gas taxes are priced per gallon. The national average is 48.88 cents per gallon, (NOT on the total price spent at the pump) So since gas is cheaper, people can afford to by more gallons, and a lot of people can fill up now instead of just getting 1/2 or 3/4 of a tank. I suspect people are buying more gallons of gas and since the tax is based on 48.88 cents per gallon, many states are possibly collecting more in gas taxes that when it was $4.00 per gallon – just sayin…
…collecting more in gas taxes THAN when it was $4.00 per gallon…
Looking at that chart O’s plan plots the US trajectory into a similar position to where Greece finds itself now on that chart… industry-less… and bankrupt! But analyzing his moves, that has been his plan all along has it not?
Willis brilliant crossplot. Need this dumbed down a bit and it could be used on billboards! Very powerful message
sol WILLIS
Thanks for the clarification. I have modified my past comments as a result..
Renewables account for 13% or 171 000 MW of the US total electrical capacity of 1,151,812 MW in 2013 . So if the renewables are to go to 28 % of the total capacity by 2030 there will have to be a doubling of the renewable capacity or additional renewable power of at least 171,000 MW by 2030 . During the 5 years 2008-2013, the last period for which data exists, about 51,424 MW of renewables capacity was added. So in the next 15 years , they should be able to add another 171,000 mw based on the most recent experience . I understand that about 25,246 MW of coal generated power will be phased out due to new regulations and obsolete plants . GERMANY ‘S renewables capacity is about 29.4 % of their total capacity , but their overall capacity is only about 177,000 MW in 2012 , much smaller than that for US . Europe is 30 % in 2012 for renewables with an overall capacity of about 1,075 000 MW. Germany is already having problems with their smaller grid with almost 3000 grid adjustments / year. They have 35,000 MW of wind power and 37,000 MW of solar capacity . US has already 61,107 MW of wind capacity and 12,000 MW of solar capacity in 2013 and this will probably double again . There is very little good historical experience in operating such a huge power grid with so much renewables as US is now contemplating
My concern is not only about the quadrupling of the cost of electricity , but the reliability of the future 2030 grid with almost 340,000 MW plus some of intermittent power spread all over the nation. Obama has washed his hands of any future responsibility by saying that the power producers and grid operators have to solve the problems. However, he is making the final decision and has overall accountability for the problems that may arise,. In my opinion,in the end, the consumers will have a much less reliable electrical system with more frequent power outages , 4 times higher electrical costs at least and with no detectable impact on climate which really cycles every 60 years and is now heading for cooler weather rather than warming . We may be leaving a mess for our future generations , not helping ve the problem s. In the end, the consumers will have a much less reliable electrical system, more frequent power outages , and 4 times higher electrical costs will no detectable impact on climate .
Dear Willis,
I am shore your view based om energy prices per head population per country is correct but when I look at Germany where I live the reality is quite a different picture.
Germany has invested over 100 trillion euro in solar alone.
Because most countries but especially Germany protect their power intensive industry from price hikes the have decided to trade power at an exchange. It could very well be that the energy traded at the exchange has gone down in 2013 but not for the consumer, the avaerage family.
On top of their electricity bill they have to pay a consumer charge which will go increase even if the power traded on the exchange goes down.
at the same time the “Energiewende” completely detroying big utilities like RWE because they have the obligation to keep massive back up power in the air which comes at the same costs as 24/7 base load production. This is part of the general plan to create one big European Power Consortium and at the same time destroy the Middle Class in order to tear down the consumer society. In Germany alone we have over 1 million families (not persons) who are no longer able to pay their power bills.
Statistics and the reality of the day make a difference between day and night here.
This is the biggest con in history.
Renewables almost bankrupted the Spanisch State and the highly prized Danish Windpark has been sold. Two weeks ago I drove from the Ruhrgebiet to Bavaria and all along the Autobahn I saw solar parks but they were not maintained because they were covered by plants and grasses.
Nobody cares about the exploitation of these parks. They were subsidy hogs serving the banks and the project initiators and the suppliers and for nobody else. Just for the record, 100 billion euro to cover 6% of the total power use in Germany is a joke and the bill will be paid by the tax payer and the consumer via their utility bills.
Have a read at this report from the Frauenhofer Institute http://www.ise.fraunhofer.de/en/publications/veroeffentlichungen-pdf-dateien-en/studien-und-konzeptpapiere/recent-facts-about-photovoltaics-in-germany.pdf which is specialized in research of solar, thermal systems and batteries. Of course they have a vested interest in this business so they sketch a colorful future but they also explain how all the pieces of the energy puzzle fit.
In the meantime solar projects have crashed in Germany and they are behind on their targets.
Looking at energy prices per head of the population IMO is just like watching the summer ice melt and claim that it is caused by climate change.
R. de Haan
100 trillion Euro’s for Germany’s total renewable budgets? Can’t be.
Recheck your source, please.
In the scatter plot you have France at about 16% produced by renewables, but I think this is renewables including hydro, with the breakdown of this total about 76 / 24 % in favour of hydro, which in turn means that wind and solar are less than 4% of total electricity production. But I am definitely not a numbers person, so I may well have got it wrong.
Willis,
does the wording on the scatter plot need changing to match the units?
Here is another way of looking at the European experience and what we can expect in the US in which I provide references and data but not the graphics because I don’t know how.
US EIA graphs the change in average residential electricity prices in Europe and the United States from 2006 to 2013 at http://www.eia.gov/todayinenergy/detail.cfm?id=18851# . The key takeaway is that it has increased by over 40%.
The European Environmental Agency published a summary of trends and projections in Europe in October 2014. Figure 5.5 in http://www.eea.europa.eu/publications/trends-and-projections-in-europe-2014 includes the trend of renewable energy in the European Union using the renewable energy source share of gross energy consumption.
I digitized data from the graphs and converted the Renewable Energy increase to a percentage as shown below.
EU Renewable Energy Source % of RES % Increase Price % Increase
Gross Final Energy Consumption Since 2006 Since 2006
2005 8.5
2006 9.2
2007 9.8 6.8% 11%
2008 10.4 13.6% 15%
2009 11.7 27.3% 16%
2010 12.3 34.1% 20%
2011 12.9 40.9% 29%
2012 14.0 52.3% 36%
This comparison shows that since 2006 EU electricity prices have clearly increased at the same time that the EU renewable energy source share in gross final energy consumption has increased.