By Michael Shellenberger, President, Environmental Progress.
Over the last year, the media have published story after story after story about the declining price of solar panels and wind turbines.
People who read these stories are understandably left with the impression that the more solar and wind energy we produce, the lower electricity prices will become.
And yet that’s not what’s happening. In fact, it’s the opposite.
Between 2009 and 2017, the price of solar panels per watt declined by 75 percent while the price of wind turbines per watt declined by 50 percent.
And yet — during the same period — the price of electricity in places that deployed significant quantities of renewables increased dramatically.
Electricity prices increased by:
- 51 percent in Germany during its expansion of solar and wind energy from 2006 to 2016;
- 24 percent in California during its solar energy build-out from 2011 to 2017;
- over 100 percent in Denmark since 1995 when it began deploying renewables (mostly wind) in earnest.
What gives? If solar panels and wind turbines became so much cheaper, why did the price of electricity riseinstead of decline?
EPElectricity prices increased by 51 percent in Germany during its expansion of solar and wind energy.
One hypothesis might be that while electricity from solar and wind became cheaper, other energy sources like coal, nuclear, and natural gas became more expensive, eliminating any savings, and raising the overall price of electricity.
But, again, that’s not what happened.
The price of natural gas declined by 72 percent in the U.S. between 2009 and 2016 due to the fracking revolution. In Europe, natural gas prices dropped by a little less than half over the same period.
The price of nuclear and coal in those place during the same period was mostly flat.
EPElectricity prices increased 24 percent in California during its solar energy build-out from 2011 to 2017.
Another hypothesis might be that the closure of nuclear plants resulted in higher energy prices.
Evidence for this hypothesis comes from the fact that nuclear energy leaders Illinois, France, Sweden and South Korea enjoy some of the cheapest electricity in the world.
Since 2010, California closed one nuclear plant (2,140 MW installed capacity) while Germany closed 5 nuclear plants and 4 other reactors at currently-operating plants (10,980 MW in total).
Electricity in Illinois is 42 percent cheaper than electricity in California while electricity in France is 45 percent cheaper than electricity in Germany.
But this hypothesis is undermined by the fact that the price of the main replacement fuels, natural gas and coal, remained low, despite increased demand for those two fuels in California and Germany.
That leaves us with solar and wind as the key suspects behind higher electricity prices. But why would cheapersolar panels and wind turbines make electricity moreexpensive?
The main reason appears to have been predicted by a young German economist in 2013.
In a paper for Energy Policy, Leon Hirth estimated that the economic value of wind and solar would decline significantly as they become a larger part of electricity supply.
The reason? Their fundamentally unreliable nature. Both solar and wind produce too much energy when societies don’t need it, and not enough when they do.
Solar and wind thus require that natural gas plants, hydro-electric dams, batteries or some other form of reliable power be ready at a moment’s notice to start churning out electricity when the wind stops blowing and the sun stops shining.
And unreliability requires solar- and/or wind-heavy places like Germany, California and Denmark to payneighboring nations or states to take their solar and wind energy when they are producing too much of it.
Hirth predicted that the economic value of wind on the European grid would decline 40 percent once it becomes 30 percent of electricity while the value of solar would drop by 50 percent when it got to just 15 percent.
EPHirth predicted that the economic value of wind would decline 40% once it reached 30% of electricity, and that the value of solar would drop by 50% when it reached 15% of electricity.
In 2017, the share of electricity coming from wind and solar was 53 percent in Denmark, 26 percent in Germany, and 23 percent in California. Denmark and Germany have the first and second most expensive electricity in Europe.
By reporting on the declining costs of solar panels and wind turbines but not on how they increase electricity prices, journalists are — intentionally or unintentionally — misleading policymakers and the public about those two technologies.
The Los Angeles Times last year reported that California’s electricity prices were rising, but failed to connect the price rise to renewables, provoking a sharp rebuttal from UC Berkeley economist James Bushnell.
“The story of how California’s electric system got to its current state is a long and gory one,” Bushnell wrote, but “the dominant policy driver in the electricity sector has unquestionably been a focus on developing renewable sources of electricity generation.”
Part of the problem is that many reporters don’t understand electricity. They think of electricity as a commodity when it is, in fact, a service — like eating at a restaurant.
The price we pay for the luxury of eating out isn’t just the cost of the ingredients most of which which, like solar panels and wind turbines, have declined for decades.
Rather, the price of services like eating out and electricity reflect the cost not only of a few ingredients but also their preparation and delivery.
This is a problem of bias, not just energy illiteracy. Normally skeptical journalists routinely give renewables a pass. The reason isn’t because they don’t know how to report critically on energy — they do regularly when it comes to non-renewable energy sources — but rather because they don’t want to.
That could — and should — change. Reporters have an obligation to report accurately and fairly on all issues they cover, especially ones as important as energy and the environment.
A good start would be for them to investigate why, if solar and wind are so cheap, they are making electricity so expensive.
Not sure what the California subsidies are, but the price of electricity is usually substantially FIT subsidy as well as capital grants, so cheaper panels don’t reduce the subsidies paid to solar panel owners that are in poor people’s bills. Joined up thought seems hard for Californians, who are happy to pay for rich people’s cheap electricity and vote for the people who make them. Bad idea. It’s your money.
Yep. I have the pleasure of PAYING $$$ for my wealthy neighbors virtue-signaling and uglification of their rooflines. And I will probably also PAY $$$ for their replacement panels in 10 years.
“Hirth predicted that the economic value of wind on the European grid would decline 40 percent once it becomes 30 percent of electricity while the value of solar would drop by 50 percent when it got to just 15 percent.”
Are those numbers reversed?
This story was already published, not that long ago. What happened?
Or was it not at WUWT?
There it was
https://wattsupwiththat.com/2018/04/24/how-solar-and-wind-are-causing-electricity-prices-to-skyrocket/
“Over the last year, the media have published story after story after story about the declining price of solar panels and wind turbines. People who read these stories are…”
Is there any difference, besides the title?
As one of those sad Californians forced to pay 5x the electric power rate increase of my fellow Americans … I have to tell you that MOST of that cost disparity is … political. Political, because the supermajority of leftist CA politicians have successfully DEMONIZED, ewwwww … consumption … of electricity. Just as the Left has successfully demonized the driving of automobiles, and disposable plastic shopping bags … and cigarettes … they have demonized, nay, made IMMORAL … the consumption of electricity. As a result, they are free to TAX energy use, SCOLD energy users, and allow the PUC to increase electricity costs across the State. Equipment cost and efficiencies of power generation don’t set energy costs … the PUC does. And in this current climate (pun intended) of energy use demonization … the PUC is free to PUNISH consumers … instead of PROTECT consumers as is their chartered mandate.
My personal energy provider here in N.CA is PG&E. My utility employs and deploys thousands of eco-foot soldiers to lecture consumers on how NOT to consume. A big chunk of my electricity rates PAYS to scold myself about how to put on an extra sweater, or add another layer of home insulation in my mild temperate climate to cut my energy use by 2%. Another big chunk of my PG&E invoice goes to PAY for my utility company’s incompetence in burning several people to death in San Bruno. Seems my utility … forgot … to tell State and local building officials where their high pressure underground gas lines are located, which allowed multiple structures to be literally built over their gas lines, if not simply within … burning distance. And in this day and age of GIS mapping … there is still no GIS overlay maps which illustrate (to the public) where these gas lines are located. So it is buyer beware of (burnable) real estate in CA. My PG&E bill has steadily increased (at 5x the national rate) to fund a never ending PR campaign on TV, radio, and internet telling me how “safe” and “inclusive”, and “green” PG&E is on my behalf. Why? It’s not as if I can “change” utility companies. PG&E is a monopolistic public utility.
My near-exponentially increasing PG&E rates pay for anything BUT the delivery of electricity and natural gas … but pay a HUGE $$ amount for virtue-signaling … to me. A cost that I resent paying to a de facto energy monopoly. A cost that has NOTHING to do with (what should be) the mission of delivering cheap, plentiful, energy to consumers.
And to add injury to insult, your state has acquiesced to the demands of politically motivated environmentalists to shut down your two nuke plants: Diablo and SONGS. Leaving you with even less energy to fill your base load requirements and forcing your rates even higher.
rip
“Between 2009 and 2017, the price of solar panels per watt declined by 75 percent while the price of wind turbines per watt declined by 50 percent.”
Cheaper components could have a bearing on increased costs. A friend had a solar power design/installation company and noticed the newer, cheaper imported panels were increasingly substandard. He had high-quality standards and was losing on quotes to those employing the cheaper, inferior components and so he left the industry.
If the rush to supply ever cheaper solar/wind technology components means more long-term replacement/servicing costs, maybe the providers would pass on these increases to consumers.
https://stopthesethings.com/tag/wind-turbine-collapse/
This is nothing new, it was obvious from the beginning that putting in solar and wind still needed baseload, which meant you were self-condemned to pay for two separate generating infrastructures and systems, not just the one. Plus the tax hit of subsidies cost, on top.
Renewables will never be renewable, nor cheap enough to not wreck economies, or be competitive against people smart enough to not use ‘renewables’ at all.
This was entirely forseeable over 25 years ago.
Only the renewables industry crooks refused to admit the conjob tat tbey were knowingly playing on everyone.
Media actually do a reasinable job on “green” issues?
Lol, good luck with that.
There is even less chance of journalists actually critically reviewing “big green” than for policy makers to do so.
And the chance of policy makers critically reviewing the scandalous issues of “big green” is almost 0%.
Congrats 350.org ……for nothing. And no thanks to utility regulators for dropping the ball again.
Rooftop solar amounts to populist energy policy pressure at any cost while wind power amounts to backroom lobbying effort. The corrupted deciders are the common denominators who will rake in more money after leaving office.
I believe it relevant (and am surprised it isn’t mentioned in the author bio or subsequent comments) that the author Michael Shellenberger is running for Governor of California. Based on this article I wish him success.
Good post to put before those who continue to argue that ‘wind is free’.
A victorian who ran a shipping line in the days of Empire was asked why he was buying more expensive steam powered ships to replace his sailing clippers, that also required him to buy fuel to power them.. The answer was simple “only the wind is free”.
PS marine diesels are over 50% thermally efficient, because they are big, heavy and can rev slowly, so combustion is optimised. Made me realise modern smaller capacity car engines with high specific power output per Litre are not the most efficient, they have the best power to weight ratio that involves a loss of efficiency due to the high rotational speeds required to get the air through a smaller engine, and the limits that imposed by gas flow, And cars have to cope with a lot of stop and go that ships don’t, so weigh matters there as well. For ships, heavy makes you happy, as someone sang.
Well, more accurately: In train locomotives, “heavy” is “OK” simply because the locomotive needs a lot of weight to provide traction on the steel-steel low-friction, small area between wheel and track. In ships, “heavy” is “manageable” (if not liked) because today’s very large commercial ships are relatively slow-speed (15-18 knots nowadays) but good fuel economy is mandatory. In faster ships and in all aircraft and cars, “heavy” is very, very costly and any increase in weight is only reluctantly accepted. So today, spare tires are made smaller (donuts) or eliminated entirely; gas tanks are made smaller, car bodies are made smaller, metal is eliminated or thinned down to near-nothing…..
Trains also don’t stop and start much, BUT they go up and down hills, so weight is a problem, although I am unsure what the % of engine to payload is. Ships generally don’t go uphill under their own steam. Or wind.
This has been a bee in bonnet for a long time. All of the evidence suggests and modern electricity prices are broadly proportional to the deployment of renewables.
The intermittent output from wind and solar power plants is clearly part of the problem. Another is the large number of pings feeding at the public trough including politicians, businesses and activists.
Anyone with solar panels or windmills, need to start paying royalties to government and dividends to the pension plans.
“Electricity in Illinois is 42 percent cheaper than electricity in California ”
For now.
We will soon be at California levels when our nukes get decommissioned.
Nobody here is asking what is the right price for electricity? Should it be as cheap as possible for domestic consumers?
I do not believe so due to what we know about human psychology. If electricity is too cheap people won’t bother turning things off. Electricity needs to be priced at a level that the ordinary person considers their usage and tries to minimise it. I do believe we all have a moral responsibility to not waste resources as the needs of future generations need to be considered by us. Sustainability is not just a nice idea but, I believe, a moral imperative on all of us. Our current consumerist disposable culture is utterly unsustainable.
What this has to do with the debate here is that renewables do make electricity prices higher. This isn’t a surprise to me as I am a power system engineer and understand the technology and the underlying economics. We know, not from computer models but real-world metered data, that modern wind turbines do indeed pay for themselves energy wise. The backup can be and is capex cheap open cycle distillate fired plant with high marginal running costs. Overall that portfolio is more expensive than a traditional grid but we Western nations can afford it and should so price electricity for the reasons above. However, imposing this model on poor developing nations is morally wrong unless we support it financially.
I think no one is asking what the “right” price is because there’s no such thing. Your opinion that conserving electricity is a moral responsibility is, just that, an opinion. The idea that we’re going to run out of energy and we must conserve for future generations is rather silly when you consider the immeasurable reserves this earth contains. The idea that we won’t have some alternative fuel, once fossil fuels and fissionable materials are depleted, is untenable.
So, to the original point, electricity should be priced according to what the market bears without attempting to add some misguided morality to the equation.
rip
If we take JoeH’s thinking to it’s logical conclusion, we must never use anything, because our children might need it.
Of course our children can never use anything, because their children might need it.
And so on until the sun goes red giant and destroys the earth.
The logical thing to do is to use the resources we have to produce as much wealth as we can, so that we can pass that wealth on to our children, so that they can use resources we haven’t even thought of yet to create even more wealth to pass on to their children, and so on.
The idea that we must impoverish ourselves for our children’s benefit is the kind of nonsense that appeals to people who spend most of their time figuring out new ways to control what their neighbors are allowed to do.
The earth doesn’t have immeasurable reserves and we know that for certain already. In the area of fisheries, for example, we know beyond any reasonable doubt that we are over-fishing some species. It isn’t a localized problem but a global one as some predatory species such as various types of tuna etc are becoming harder to catch in the open oceans. Statistically we are certain it is due to reducing stock and it’s a global not local issue.
WRT energy I accept that the reserves aren’t nearly as obviously depleted and that the economics are complex in that as oil prices rise the available reserves rise due to extraction break even points. However we know they are not infinite and we shouldn’t act as if we thought they are.
I never said we had to live in caves freezing so that future generations can live well. I said we need to take them into account in our decision making which includes new sources of energy they may have that we don’t. If we can afford (and we in the West certainly can) to make our energy supplies more sustainable then we should. It is a moral imperative that we as democratic societies are free to choose.
JoeH,
” … This isn’t a surprise to me as I am a power system engineer and understand the technology and the underlying economics. …”
—-
You’re no such thing Joe, you’re just another fake wanna-be greenie, with a solar panel scavenged from the dump, calling yourself an industry “engineer”, talking the usual greenie drivel/theme.
And btw, how many times can you say, “…I believe…”, in one comment? And all that poo about ‘morality’, get off your high horse, you sound rediculous.
Agree about developed nations not being allowed energy sources that can get them developed, that the developed countries used to achieve that result. Particularly when these countries are where our manufacturing moves to so they need more energy to manufacture the stuff we used to.
BUT: We don’t have to impose renewables on anyone to get the best energy delivery on every measure of policy. Why is it wrong to use energy wastefully if it can be produced sustainably, at almost zero marginal cost, 24/7, once the CAPEX is amortised and there are no significant environmental impacts.. This is close to the case with thermal fission reactors and will be the case with fast fission reactors. No need for rationing or economy, nuclear binding energy allows an all yopu can eat approach. Even electric cars start to make sense, as does manufacturing synthetic hydrocarbons such as ethylene and petrol for a our legacy V8s and plastics factories. Making plastic from atmospheric CO2 and water will become carbon capture and storage ;-), all a good use of off peak nuclear generation surpluses once easily variable fossil is off the grid, cheaper to dump the surplus at tiny rates than cycle the nuclear power stations.
This is all guilt free, with no actual waste problem using modern P&T technologies available around the world outside the USA, and an end to the US nonsense of simply vitrefying most spent fuel and wasting the fertile actinide in it, etc. . Bonkers.
They just need to move their wind and solar to where the wind and sun will be when people want power. No problem; the CAGW psychics KNOW what the weather is going to be, right?
The cost of electricity is actually understated because tax payers are absorbing the failed business subsidy costs of “renewables ” that have flamed out . In addition base load gas plants that must be on hot standby operate less efficiently and the costs get passed on to consumers .
Government mandated “renewable ” energy such as bio gas is double the price of traditional natural gas
yet gets foisted onto consumers while blended into their bills .
Carbon taxes and other hidden taxers are often deceitfully buried in the cost of energy and in loon places like British Columbia add a third to the cost .
Renewables are an egregious mistake responding to misinformed subsidy. It is not simply a matter of increased cost. The energy consumed to design, manufacture, install, maintain and administer renewables exceeds the energy they produce in their lifetime. Without the energy provided by other sources, renewables could not exist. They can only exist now because fossil fuels are still used to power industry, heat our homes, power nearly all vehicles, power farming, etc.
But, but I have it on good authority that wind saves natural gas with no downsides and nuclear plants near-SCRAM 30 times a day!!!
The system interaction is too complex for Australian grid planners to comprehend. They cannot think beyond LCOE (Levelised Cost Of Electricity). It is the gold standard in judging relative merits of generating sources. With latest designs of wind generators achieving capacity factors of 45% the LCOE is down to around AUD60/MWh.
There is no way that modern coal plants can be built to produce at a cost that low. Hence the only consideration is for more wind power.
Australian eastern States now have 5200MW of grid scale wind generation and a similar amount of rooftop solar. This is in a system where average demand is 22GW. However the wind generation is concentrated in South Australia which has 1800MW of wind generation and 800MW of solar and average demand is 1200MW. It might be obvious to some that there will be times when the 2000MW of run-whenever-you-like generation can exceed the load. At those time the market regulator requires the wind generators to reduce output – so called CURTAILMENT.
These circumstances were not envisioned by the wind generator owners and they complain that profits are down due to CURTAILMENT. The wind proponents, the market regulator and the government cannot understand this. They just see that wind has the lowest LCOE so adding more wind MUST lower costs.
The price chart on this link shows just how dumb Australians are:
http://www.energyaction.com.au/energy-procurement/aex-reverse-auction/energy-action-price-index
The prices shown are essentially the wholesale price. Retail prices are around 200% higher due to distribution and retail charges. South Australia is one of the places on earth where solar plus battery is economic with grid power. The chart gives an indication why. It is apparent that none of those who direct the development of the network have made the connection between rising prices and intermittent generation. They focus entirely on LCOE.
This problem is well known in systems engineering. In simple terms, it is a local optimisation at the expense of the whole system.
This is obviously a lesson that the Australian grid planners missed. The top grid planner in Australia, Audrey Zibelman, may not have had systems engineering units in her law degree. Actually I do not think any of the AEMO executive team studied any form of engineering.
Despite blindingly obvious evidence, none of the grid planners in Australia have seen any connection between grid connected intermittents and power prices. But then they all believe in CO2 causes Global Warming/ClimateChange/Climate Disruption despite the evidence.
Why Nations with more renewables have more expensive electricity.
Attempting to understand how electricity coming from the seemingly free wind and sun could lead to a tripling of electricity prices.
Germany — with peak electricity demand of about 83 GW — had rushed in recent years to build “renewable” capacity that had reached about 84 GW, theoretically enough to supply all the electricity they would ever need.
But somehow, Germany still had retained fossil fuel generating capacity of about 108 GW, which is about the same fossil fuel capacity you would want to have to supply 83 GW of peak demand if you had no renewable capacity at all.
Despite spending hundreds of billions of euros on the renewable capacity, they had not been able to get rid of any fossil fuel capacity at all!
They still need all the fossil fuel capacity for backup when the wind does not blow and the sun does not shine.
Despite declining relative costs for wind and solar generators, the electricity they produce is still much more expensive than fossil-fueled and nuclear power.
Francis Menton Manhattan Contrarian
The interesting bit of data missing here is the cost of electricity in Norway, which is acting as the battery for the rest of Europe. With nearly 100% hydro power, they have the ability to accept excess generation from Denmark, Germany and others, and then sell it back at a markup when the wind doesn’t blow or the sun doesn’t shine. Norway has other highly intermediate source-dependant countries over a barrel. Can anyone post a graph of their electricity prices?
Actually, according to the ever-reliable Wikipedia:
If Norway’s per-capita consumption was more than three times the EU average, it can only be because the cost is comparably lower. I found another link: which shows electricity price for Norway at roughly 0.23 Euro/kwH, which seems rather high to me considering the Georgia Power (US) maximum summer household rate is a little over $0.097 USD per kWh (Winter marginal rate over 1,000 kWh is $0.047). Pity the poor Europeans if they have it worse than Norway!
Also not factored into all of the various explanations of the cost of your electricity is the fact the public utilities are a MASSIVE tax collection racket for the City, County, and State they do business in. Get on the internet and look at the annual report for your Electric Utility. Look for the entry on property taxes. Just like every other company the electric utility is taxed on every piece of property they own. That means every building, vehicle, power pole, each and every foot of wire, every transformer, even the line drop from the pole into your house and the meter that reads the amount of electricity you use. Worse yet, in some states you get socked with your state and city sales tax on your bill. As I have lived in seven different states over the years I have looked into how much this secret tax collection is and it averages from about 40% to over 55% (including the Sales Tax when applicable) of the total you pay for electricity. That “tax” collection continues as long as the power plant and the distribution system exists and the need remains regardless of how many people put solar panels on their house. Thus, this tax continues to get collected.
Ponzi scheme investments with no Return on Investment. Have you heard yet Ma and Pa Kettle bragging on the profit from their windmill? Alt-energy is a tout’s tool.