A Look at Impacts of Wind and Solar Electric Generation on Electricity Price

Guest essay by Michael MacDonald

Energy Performance Measurement Institute (EPMI)

Electricity generation using wind and solar energy has come a long way over the last five decades. Governmental subsidies have come a long way also, from mainly fostering fossil fuels to assisting solar and wind deployment big-time. In this second decade of the 21st century, some concerns have been raised about how much solar and wind electric generation is sensible to install and how much is worth paying to do so. In addition, though not discussed much, there is an important question of how to handle technology transitions effectively.

Beginning with the Rio Summit[1] in 1992, governmental entities began making wild promises about saving the earth. Renewable energy achieved new status as the energy source of choice to help in saving the planet. Today, governmental commitments to eliminating use of carbon-based fuels and achieving 100% renewable energy for large geographic entities have become almost boring in their predictability. After all, we must save the planet. There is no time for “sensible” technology shifts. Over decades, the promises have mostly proven to be hot air, but politics often lives on empty promises.

By the time of the Paris “climate-saving” conference in 2015, saving the planet had come to mean so many things it was difficult to actually make sense of it, unless one believed mountains of politically correct platitudes alone have the power to save. Even the planet-saving scientist James Hansen called the Paris talks a “fraud.”

Unfortunately, “saving the planet” in extreme ways with desperately short timetables also often means extreme consequences. Europeans have talked about complete “decarbonisation” of Europe (probably requiring elimination of most industry), but over time the implications of such planet-saving efforts appear to have cooled the rhetoric. Hawaiians have committed to having a 100% “clean” energy economy by 2045, and whatever that means will likely evolve over the next decades. California has now promised to be on the 100% renewable bandwagon by 2045. How empty will these promises be? The horizon is too far in the future to care much.

Rush to Change

Fortunately, the push to renewable electricity generation has led to important increases in the renewables share of electricity generated and also important improvements in the technologies and grid integration. But some have raised concerns that the rush to renewables may have gone too far (or maybe too fast), at least in some locations. Surcharges and taxes on energy to support renewables implementation have caused major price spikes for electricity in some locations and uncomfortable price increases in others. In the United States, major increases in use of renewables electricity generation in some locations have not caused much impact on prices locally, although decreasing use of coal does appear to have some discernable price increase impacts.

In Germany, where 16% of electricity in 2016 was generated by wind and solar power, and price increases have not been popular, it is reported that about 800 citizen-led initiatives have been started to fight the government’s energy plan and objectives. In June 2018, the German energy minister appeared to be retreating from European objectives to a degree in remarks made at a meeting of European energy ministers. Wind energy subsidies in Germany are reported to start expiring soon, and thousands of older wind turbines may be shutting down.

In South Australia, disruption events appear to have been introduced into the electricity supply through major increases in use of wind and solar electricity generation, and Australian electricity prices have increased dramatically over the last decade. Wind power provides about 35% of total electricity generation in South Australia, over double that of Germany. Australians appear to have sharp divides between those who support planet-saving efforts (and also seem unfazed by major increases in electricity prices) and those who feel such efforts can be misguided at best and economic suicide at worst. (Some political suicide also may be coming.)

An article in the MIT Technology Review provides an estimate that California’s push to 100% renewables may require an investment of $2.5 Trillion to provide required energy storage (and reliability of storage technologies is uncertain).[2] One has to wonder whether citizens there might start to oppose this much additional investment in energy infrastructure? Especially as they have to start paying for it (possibly more than once if reliable technology lifetimes of storage are too short).

Current skeptical studies of the impacts of wind and solar electric generation on electricity prices have typically looked at the relationship between installed capacity per capita (kW/capita) and prices.[3] One example of this presentation is shown in the figure to the right, based on data from about 2014 (see footnote 3 for where it can be viewed in an Australian context). Deciphering or interpreting how a trend line on energy use (kWh) is related to power (W) is not straightforward.

image

Concerns about rising prices due to wind and solar electricity generation are beginning to lead to some resistance to further increases in solar and wind capacity in some locations. Concerns about potential inadequacy or high costs of power storage technologies are also cautionary. Analysis of price trends is limited, and the governmental push toward 100% renewables by some entities may be too costly in the end. Concurrent pushback and the push to 100 is a conflict. Pushing to save the planet is also in conflict with a lot of scientific data showing the planet does not need to be “saved” in a short period of time (or may not need saving at all). The consideration of whether there are optimum levels of wind and solar generation, and what the factors affecting any optima are, seems lost in the conflict(s).

Toward Increased Understanding

This paper looks at energy price vs total percent of electric generation for wind plus solar technologies in the year 2016 for several European countries and the 50 United States plus the District of Columbia. Trends based on these factors will be direct and not obscured by mismatches in units, although there are still issues related to grid interconnection levels, exports and imports of electricity, and what an “average” electricity price is. Changing the units to percent of electricity generated is one way of making the situation more understandable (kWh/capita might be another way, but is more obscure in some cases). Increased understanding of impacts of wind and solar generation on electricity prices is needed to begin to analyze potential optimization of electricity generation technology mixes, and maybe also to consider reasonable timelines and strategies for shifting technologies.

The push to increase renewables electricity generation has similarities in both the United States and Europe, but since the United States is such a large country, and since interstate electricity transmission is substantial, the US situation at the individual state level may have limits of comparability to individual European countries. European inter-country electricity transmission appears more limited than US interstate transmission. The extent of these differences may be useful for consideration of how best to shift technologies and limit price impacts, but they are not analyzed here.

This “look” at the current situations uses existing data to make the comparisons, and there are differences in types of prices used in Europe vs prices in the United States. The US EIA estimates an average price directly. Eurostat does not estimate average prices and instead has data on price components, so calculating an average “price” is complicated. So the results here are limited to a degree by the data available, but they provide one look at current discernible effects on price. Further study is needed.

US Trends

Electricity generation data for the US trends come from the Energy Information Administration (EIA) Electricity Data System[4] for 2016. Price data come from the EIA State Energy Data System (SEDS).[5] EIA has state-by-state (including the District of Columbia) estimates of electricity production by fuel type, and also has an overall average electricity price for all sectors combined (industry, transport, residential, and commercial). The total electricity generated by “fuel” types of interest for each state was divided by total electric generation for the state to calculate state-by-state shares of electricity generation mix for each. Exports are included in total generation, and imports are not. The major fuel types of coal, natural gas, and nuclear were analyzed, along with the combined generation for wind and solar technologies. Hydroelectric is an important type but was not considered here (hydro provided 6.6% of US total generation in 2016).

These average state prices were analyzed against wind+solar generation share, for these 51 data points using OLS regression. The results of the cross-sectional regression indicate no detectable relationship between state-level electricity prices and wind+solar shares re generation as specified here (F = 0.77, model Pr = 0.386, and adj R2 = –0.005). The wind+solar generation shares and average prices for the 51 states+DC are shown in the figure to the right.

image

Regressions for the major fuel types of gas and nuclear indicated no discernible cross-sectional trends, with model significance as poor or worse than for wind+solar. For coal, a discernible negative trend was found (F=12.03, model Pr = 0.0011, adj R2 = 0.18). In 2016, using no coal for generation has an expected average state price determined by the regression to be 10.7 cents per kWh, decreasing 0.046 cents / kWh for each one percent increase in coal generation share. The significance of the intercept was greater than 99.99%, while the coal-share percent coefficient was significant at the 99.9% level.

The coal-share for the country is about 30%. The highest state coal-share was in West Virginia, at 94.2%. A quarter of the states have a coal-share of 75% or more. The electricity price in North Dakota, Iowa, and Kansas is low because of significant coal-based generation (70%, 46%, and 49% respectively). The price in Oklahoma remains low due to cheap natural gas and a combined gas+coal generation share of 71%. South Dakota has both coal and extensive hydro generation that keep price lower. These older (sunk-cost) coal plants are an important factor in keeping electricity price reasonable, and rushing to exterminate them could be foolish price-wise.

Several states have wind+solar electricity generation share in the same range as South Australia or Denmark, but electricity price jumps have not been observed. The push to renewables in Europe and Australia has been reported to be also a push toward elimination of coal-based generation. Comments from Europe have indicated some congratulatory celebration for reducing the extent of coal-fired electricity plants, although the pushback in Germany has recognized the major issues related to backup generation needed to maintain grid reliability. Comments from Australia have indicated that the push to eliminate coal plants may have gone too far, and that there really is a need for underlying dispatchable plants (e.g., fossil-fuel thermal plants) to handle overall system reliability and stability in the face of the variability of wind and solar generation. The US situation is one of high levels of grid interconnection between and among states, and extensive interstate transmission. The US wind+solar generation fraction for the entire country in 2016 is 6.5%, and average price is 8.87¢/kWh.

The US push to wind and solar generation also had a more recent contemporary effort to eliminate coal-based generation via the Clean Power Plan (author interpretation), but that “plan” was legally flawed and probably never would have survived the legal challenges, and has now been relegated in all likelihood to the dustbin of history via executive fiat. In addition, this attempt to coerce shifts in generation technologies (or fuels) via legally suspect means has led to restriction currently of the ability of the government to regulate carbon dioxide as a “pollutant.”

The effort to increase wind and solar generation, while also not using extreme efforts to reduce coal generation, allowed US market forces to influence the timing and nature of the shift. Understand that the “market” was strongly influenced by federal subsidies for wind and solar, and the subsidy situation is in flux at this time, but for the last decade the combination of wind and natural gas combined-cycle generation plants crushed new coal plants, while also not leading to major electricity price spikes. Reliability has not seemed problematic.

European Trends

European energy data used are from Eurostat[6] for 2016 (May 2018 version). The price data from Eurostat are difficult to unravel without detailed knowledge of how the tariffs, taxes, and subsidies work, so the energy price data used are from the Strom-Report Blog for an “average” household in 2016.[7] Households apparently are the main subsidizers for wind and solar electricity generation, and industry prices are notably less than household prices. For manufacturing industries, tax and levy rate reductions can lower the policy-induced component of the electricity price substantially. Simplistically, industry is provided means to lower electricity price, while households pay more to support renewables initiatives. German resistance to the government energy program appears to be coming mainly from coalitions of households, although many of those households have highly competent technical expertise.

The share of generation is the same as for the US values. The wind+solar share of generation is a percent of generated electricity within country, including exports, and not imports The countries most impacted in this set of data by the import issue are Lithuania and Luxembourg, where most of the electricity used is imported. Thus, the share of electricity generated by wind and solar is misleading and would be much smaller if calculated as percent of total consumption. Price is also misleading for these two countries, since price is impacted by the price of the imports.

The calculated generation share is for the sum of wind, solar, and wave-tidal-ocean generation, but France was the only country with any wave-tidal-ocean energy, and that only a very small amount, so the results are titled as only wind plus solar generation. Energy and price data are available for 27 countries, and the data are shown in the figure below.

image

The export-import values do have some impact on the data presented here, but not enough that the trend of price vs percent wind and solar electricity generation is changed much. An OLS regression of these price data on percent wind+solar indicates a fairly strong cross-sectional trend (F=17.54, model Pr = 0.0003, adj R2 = 0.39). The results indicate that a country with no wind plus solar electricity generation would, on average, be expected to have an “average” household electricity price of 12.7 Euro cents / kWh, and the expected average increases 0.48 Euro cents / kWh for each 1% increase in wind plus solar share of electricity generation (as shown in the figure). The significance of the intercept is greater than the 99.99% level, and the coefficient on price increase with generation share is at the 99.97% level. (The US data point for the whole country would be at 6.5% and about 8 Euro cents.)

Potential discernible trends for other fuels, such as coal or nuclear generation, were not examined.

Discussion

This 2016 look at potential impact trends of wind plus solar electricity generation on electricity prices has indicated no discernible trend on overall state-level electricity price in the United States at this time but a fairly strong trend toward increased electricity price for households in Europe.

Federal subsidies for wind and solar generation in the United States have been substantial over decades, and the costs of federal subsidies are spread across the country and mostly do NOT show up in electricity price.[8] European countries are beginning to shift electricity pricing and procurement approaches relative to wind and solar resources, including use of auctions to obtain the best deals for wind and solar. Current political trends suggest the impacts of large price increases resulting from current subsidy approaches are causing difficulties (voter resistance) for incumbent politicians, and the shifting approaches to acquiring wind+solar resources may be influenced by the political trends. European wind+solar electricity generation subsidies in 2016 do appear to show up primarily in (household) electricity price, so the nature of subsidies and how account funding of subsidies is handled impacts the results seen here. Subsidies for older wind turbines in Germany start to phase out in 2020, and whether the wind+solar generation share will be maintained after 2020 is not known.

Arguments can be made about the merits of specific subsidies, but energy subsidies have been around for decades, and their changing nature must be understood to a degree in order to examine effects on energy infrastructure development. The US subsidies are changing at this time, so the next decade of electricity generation development may see differences from the last decade.

Australians are facing major internal conflict over renewables electricity generation and use of coal for same, with decisions partially being driven by recent electric grid reliability events that are not trivial. Coal continues to be a major export, leading to some dissonance in messaging about clean energy objectives. Although data for Australia are not covered here, the changes there over the next decade should also be interesting to follow.

The grid reliability issues in Australia and the beginning of grid stability issues in Europe (not covered here) are additional cautionary notes on how much wind and solar electricity generation is appropriate. The potential cost of electricity storage to allow California to become 100% renewable is also cautionary. If the conflicts affecting decisions about electricity generation technologies can reduce from current levels, inquiry into optimum shares of different electricity generation sources might be allowed to begin.

Conclusion

This inquiry into possible discernible trends for electricity price due to increasing levels of wind and solar electricity generation has shown different results for Europe as compared to the United States. The numerical analytical part of the inquiry looked at fraction of electricity generated as the independent parameter and electricity price as the dependent parameter. Prices used for the United States are state-level overall average price for all end-use sectors combined in the year 2016, reported by EIA. Prices used for Europe are “average household” prices for individual countries as reported in the Strom-Report blog for 2016, based on country-specific tariffs. US electricity generation by wind plus solar technologies for each state in 2016 was divided by total electricity generation in each state to calculate a 2016 wind+solar fraction of electricity generated. Similarly for European countries, the sum of wind plus solar electricity generation for 2016 was divided by total electricity generated in each country to calculate the 2016 wind+solar electricity generation fraction. For both US and European results, electricity imports were not included as generation, and instead were included for the state/country of export.

In Europe the cost for implementing wind and solar electricity generation up until 2016 appears to be paid significantly via household energy bills. In the United States, subsidies appear mostly not to show up in electricity billing. Cross-sectional regressions of state-level data for the United States of average state-level price on wind+solar fraction of electricity generation showed no discernible trend in 2016. Coal was the only fuel examined showing some discernible trend, where increasing share of electricity generated by coal shows an influence of decreasing average state-level electricity price.

Household electricity price in 2016 for the “average household” in Europe (based on data for 27 countries) was found to have a fairly strong discernible trend, based on a cross-sectional regression, with price increasing with fraction of electricity generated by wind and solar technologies (wind-wave-ocean technologies are also worth including in this mix, but current use is exceedingly small). Other fuels were not examined for Europe.

US state-level electricity prices in states with high levels of wind fraction of electricity generated typically retain large shares of coal-based generation, while elsewhere in the world, elimination of coal-based generation combined with increased wind+solar generation has been more of a priority. Retention of older fossil-fuel thermal electricity generating plants as part of a more price-stable transition to increased use of wind and solar resources is not a strategic concept found to receive much, if any, attention.

The results obtained for this paper indicate two contrasting pictures of the impacts of wind and solar electricity generation on electricity prices, with different effects on electricity price for Europe and the United States. Two factors that appear to have played an important role are the nature of subsidies used and grid interconnection / interstate transmission levels. Some level of retention of coal plants may also have played a role.

Improved means of keeping subsidies for different generation “fuels” on more equal standing may be needed. This paper does not examine subsidies to any degree, but an examination of how to make subsidies more comparable among “fuel” types and whether they should impact energy prices directly or not may be worth consideration. More study of price impacts from subsidies and methods of implementing subsidies may be needed, or possibly the lessons have been learned and the lessons should be documented. Changes in the nature of subsidies and of procuring wind and solar electricity resources are in play currently for both the United States and Europe. Continued evaluation of the technology (fuel) shifts is expected to be useful.

This paper did not discuss environmental impacts of wind and solar electricity generation technologies, but such impacts are reported to be nontrivial. The anomaly of rushing to save the planet on a macro scale while causing some local environmental destruction is rich in irony but too complicated to even begin to describe.

More research on the most useful mixes of electricity generation technologies, given the major increases in wind and solar generation over the last two decades — primarily driven by new subsidies, is needed to begin to address apparent undesirable impacts observed to date and expected to accrue over the next several years. The cost and benefit situation for different technologies is obscured at present and some of the smoke needs to be cleared away. Runaway prices and electric grid reliability issues should not be acceptable, although climate zealotry may brush away such concerns. Better understanding of potential optimization of generation technology mixes is desirable; wholesale changes that disrupt society are not.

Saving the planet may be a lofty goal, and certainly one that has been trumpeted for many decades now (although for different impending catastrophic doomsday stories), but the times are changing and the current doomsday story is old, tired, and likely soon to be mostly irrelevant. Rational examination of reliable and reasonably comparable data on electricity generation technology mixes is needed now to improve development of a 21st century electricity supply.

The current situation in the United States is not likely to lead to major issues, although extreme changes such as mandating 100% “renewable” energy may. Current conflicts in Australia are fueling political indigestion, and the situation there should be followed to see what develops, although the declining grid reliability in South Australia does not appear worth replicating elsewhere. The situation in Europe is in a fairly high state of change, and additional lessons to be learned from the European experience over the next several years may be important.

Overall, important changes have occurred for electricity generation over several decades, and much has been learned and accomplished relative to increasing use of renewables electricity generation. The push to renewables based on environmental fervor is now facing pushback due to some undesirable impacts. This paper provides a cursory look at changes and trends. Additional study is needed to find the best path forward.


Data Annex

Data used for the US and European regressions, as well as some additional US data are tabulated below.

US Data

The US data show the generation fractions for the “fuel” types that were examined, as well as for oil-based generation. Oil is shown to indicate the erratic picture for other fuels, which also include hydro, biomass, and some others. Vermont imports over half its electricity, and most of the untabulated balance is hydro. DC also imports most of its electricity, and most of the untabulated balance is “other biomass.”

US Data for 2016 Cross-Sectional Regressions plus Petroleum (Oil)
State Price, cents per kWh Wind+solar GWh Wind+solar % Coal % Gas % Nuclear % Oil %
AK 15.42 169 2.67% 9.4% 48.0% 0.0% 13.1%
AL 8.23 31 0.02% 24.1% 40.6% 28.0% 0.0%
AR 6.99 26 0.04% 39.4% 30.1% 22.2% 0.1%
AZ 8.87 4,307 3.96% 28.0% 31.4% 29.8% 0.0%
CA 13.11 32,316 16.41% 0.2% 49.3% 9.6% 0.1%
CO 8.46 9,959 18.30% 55.0% 23.3% 0.0% 0.0%
CT 14.81 37 0.10% 0.5% 49.2% 45.4% 0.3%
DC 10.08 0.00% 0.0% 29.7% 0.0% 1.3%
DE 9.60 56 0.65% 5.5% 89.2% 0.0% 0.7%
FL 8.51 224 0.09% 16.5% 66.5% 12.3% 1.2%
GA 8.24 881 0.66% 28.4% 39.6% 25.9% 0.2%
HI 20.52 728 7.31% 15.1% 0.0% 0.0% 66.7%
IA 7.35 20,072 36.90% 46.3% 5.4% 8.6% 0.5%
ID 6.95 2,608 16.65% 0.2% 21.2% 0.0% 0.0%
IL 8.12 10,712 5.72% 31.7% 9.3% 52.6% 0.0%
IN 7.95 5,125 5.04% 71.3% 19.7% 0.0% 0.6%
KS 9.09 14,113 29.65% 48.5% 4.3% 17.3% 0.1%
KY 7.26 12 0.01% 83.2% 10.3% 0.0% 1.5%
LA 6.65 0.00% 11.2% 62.0% 16.0% 4.5%
MA 14.16 825 2.58% 5.9% 66.2% 16.9% 1.3%
MD 10.49 736 1.98% 37.2% 14.6% 39.7% 0.4%
ME 10.99 1,667 14.48% 0.6% 30.4% 0.0% 1.0%
MI 9.51 4,705 4.20% 36.1% 26.1% 28.1% 0.7%
MN 8.62 9,944 16.72% 39.0% 15.0% 23.3% 0.1%
MO 8.37 1,155 1.47% 76.7% 7.7% 12.0% 0.1%
MS 7.50 0.00% 8.5% 79.7% 9.4% 0.0%
MT 7.82 2,140 7.70% 51.4% 1.7% 0.0% 1.7%
NC 7.90 3,427 2.62% 28.6% 30.0% 32.7% 0.2%
ND 7.69 8,172 21.59% 70.2% 2.8% 0.0% 0.1%
NE 7.77 3,802 10.41% 60.0% 1.5% 25.6% 0.0%
NH 13.45 432 2.24% 2.2% 24.6% 55.8% 0.2%
NJ 11.52 856 1.10% 1.7% 56.4% 38.5% 0.2%
NM 7.88 4,357 13.24% 55.8% 30.3% 0.0% 0.2%
NV 7.20 3,468 8.72% 5.4% 72.7% 0.0% 0.0%
NY 12.43 4,080 3.04% 1.3% 42.3% 30.9% 0.5%
OH 8.48 1,311 1.10% 57.8% 24.3% 14.1% 1.0%
OK 6.78 20,075 25.52% 24.4% 46.4% 0.0% 0.0%
OR 7.58 7,198 11.96% 3.2% 25.4% 0.0% 0.0%
PA 8.78 3,551 1.65% 25.4% 31.6% 38.6% 0.2%
RI 13.98 41 0.63% 0.0% 95.8% 0.0% 0.4%
SC 8.41 5 0.01% 21.7% 16.9% 57.6% 0.1%
SD 8.45 3,715 32.23% 18.1% 8.0% 0.0% 0.0%
TN 7.95 116 0.15% 39.3% 14.3% 37.3% 0.2%
TX 7.33 58,262 12.83% 26.7% 49.8% 9.3% 0.0%
UT 7.52 1,876 4.92% 68.0% 22.8% 0.0% 0.1%
VA 7.81 21 0.02% 17.8% 44.2% 32.1% 0.6%
VT 12.42 350 18.32% 0.0% 0.1% 0.0% 0.2%
WA 6.65 8,043 7.05% 4.0% 9.6% 8.4% 0.0%
WI 9.17 1,518 2.34% 51.4% 23.8% 15.6% 0.2%
WV 7.71 1,432 1.89% 94.2% 1.6% 0.0% 0.2%
WY 7.07 4,389 0.00% 85.8% 1.7% 0.0% 0.1%
US 8.87 263,047 6.45% 30.4% 33.8% 19.8%
European Data

The annual amount of electricity consumed by the “average household” has an influence on price.

European Data for 2016 Cross-Sectional Regressions
Country Wind+solar Percent Average Household Price, Euro cents per kWh
Austria 7.5% 20
Belgium 9.2% 27
Bulgaria 5.1% 10
Croatia 5.5% 13
Cyprus 7.6% 16
Czech Republic 2.5% 14
Denmark 33.4% 31
Estonia 3.3% 12
Finland 4.3% 15
France 4.9% 17
Germany 16.2% 30
Great Britain (UK) 14.1% 18
Greece 17.3% 17
Hungary 2.4% 11
Ireland 19.4% 23
Italy 13.5% 23
Lithuania 18.5% 12
Luxembourg 9.1% 17
Malta 14.6% 13
Netherlands 7.2% 16
Norway 0.0% 16
Poland 7.1% 14
Portugal 19.3% 24
Romania 11.4% 12
Slovakia 1.4% 15
Spain 20.0% 23
Sweden 8.6% 20

 


Footnotes

[1] United Nations Conference on Environment and Development, also known as the Rio de Janeiro Earth Summit, Rio Summit, Rio Conference, and Earth Summit — the first UN conference highly focused on saving the planet from global warming, held in Rio de Janeiro, June 3–14, 1992. The planet was to be “saved” before the year 2000, but nothing much changed.

[2] “The $2.5 trillion reason we can’t rely on batteries to clean up the grid,” MIT Technology Review, July 27, 2018. https://www.technologyreview.com/s/611683/the-25-trillion-reason-we-cant-rely-on-batteries-to-clean-up-the-grid/

[3] See for example, Jo Nova’s blog, which has links to other examples. http://tinyurl.com/y76yy7po

[4] https://www.eia.gov/electricity/data/state/annual_generation_state.xls

[5] https://www.eia.gov/state/seds/

[6] http://ec.europa.eu/eurostat/web/energy/data/energy-balances

[7] https://1-stromvergleich.com/electricity-prices-europe/

[8] See for example, Estimating the State-Level Impact of Federal Wind Energy Subsidies, Univ of Texas Institute for Energy Research, 2013. http://instituteforenergyresearch.org/wp-content/uploads/2013/12/State-Level-Impact-of-Federal-Wind-Subsidies.pdf

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88 thoughts on “A Look at Impacts of Wind and Solar Electric Generation on Electricity Price

  1. Solar/Wind equate to more expensive electricity. Good one! Bright move. I want to see California meet there 100% renewable goal…., I’d like to see that!

    • If you read some of the articles in the Australian media about energy policy etc many people think solar/wind power is free!

      • I don’t understand why the price of water keeps going up when the source of the water is “free”. As cities grow there should be greater economies of scale the denser the population becomes (numerically speaking, not mental capacity).

    • California obviously isn’t going to get anywhere near 100% renewable any time soon. Hawaii, which has no fossil fuels and therefore needs to lug them 4000km or more may eventually come a lot closer to 100% as the cost of electricity there is already quite high so things like solar hot water are virtual no-brainers there. Even in Hawaii, 100% “renewable” will require, for example, that the jet aircraft that fly in and out of Honolulu switch to biofuels. It’s not clear that’s really practical or that long term use of biofuels in aircraft is going to be safe

    • California will never have 100% renewables as long as they are importing goods from overseas that are produced in factories powered by coal and slave-like labor. We keep our dirty little secrets hidden out of sight.

  2. Prohibitive energy costs are the goal of the green revolution which yearns for the Star Trek utopia by means that will drive us into the stone age. They fail to realize that the reason Star Trek works is that they have infinite, virtually free, energy, not from the Sun, but from the direct application of E=mc^2.

    This is why China is on board. As the worlds economy moves from one where the value added to raw materials moves from labor to energy, whoever has the cheapest and most reliable energy will come out on top.

    Solar cells, where nearly all of the valued added to sand comes from energy, are just a small indicator of what’s to come if we persist down this foolish path.

    • Exactly here on the CA central coast it goes right by so fast that my average for the year was $0.25 kwh….where did that $0.1311come from?

    • Here in the Sacramento area, the PG&E rates start at $0.21 and at 400% of baseline, goes to$0.28. Then, for the ‘power hogs’ , the over 400% rate jumps to $0.41…

    • I am very proud to report that in the great state of Vermont, my current rate is $0.19/kWh.
      Unbelievable.

      • The price is described as
        “an overall average electricity price for all sectors combined (industry, transport, residential, and commercial)

        Which is USELESS for ANY comparison since every utility user across every EMC, company and city across every state line has a different minimum rate, maximum rate, and rate at different power levels at different times of day and total monthly use amount!

      • It really should be a weighted average if we want a better comparison. Or generate seperate sets of tables for industrial vs residential.

      • Which is fine as long as we all understand that the rates include energy sold at bargain non-peak rates to agricultural and industrial users, idiot crypto-currency miners, etc who can somehow take advantage of low rates in the wee hours of the morning. That is to say, from a consumer point of view, the numbers are kinda, sorta bogus.

        But I suppose they are the best that can be done.

    • Data was for 2016. Is the bill you’re looking at from 2016 or is it current?
      Nevertheless – it was too high. One of the reasons (they’re all politically related) I left Kali in 2017. Best move EVAH!

  3. The trend line on the graph titled “Out of Line on Renewables” is off by a factor of a thousand.

    The horizontal axis goes from 0 watts per capita to 1000 watts per capita. The vertical axis goes from 10 cents to 30 cents per kilowatt-hour. The trend is therefore: (30 – 10)/(1000 – 0) = 20/1000 cents per watt or 0.20 dollars per kw of installed renewables per capita. The graph shows 0.02 cents per kWH per additional kW of capacity per capita.

    Each additional kilowatt of renewable energy per capita raises the price of electricity by twenty cents per kilowatt-hour.

    • commieBob:
      Great Catch. Outstanding.

      To all:
      I am glad to see other people all over the country finding the listed rates to be Military Grade Garbage, as well.

      Most Excellent.

    • It’s a typo. The graph was originally in The Australian newspaper, and may be based on Paul Homewood’s data. The article by Judith Sloan is sadly paywalled, but it was nice to see a national newspaper actually cover the issue.

      (I also did a blog post on the topic a couple years ago, with data for Australia added.)

    • Had to check my bill. So in Pensacola we pay:
      Energy Charge: 7.93 cents per kwh, Fuel Charge: 2.95 cents per kwh, Base Charge: 1.54 cents per kwh (varies with usage), Various Taxes: 2.21 cents per kwh. Total Cost: 14.63 cents per kwh.

      Gordon gave us a glancing blow (compared to Erin, Opal, Ivan, Dennis, Katrina) although have not heard the extent of damages at the beach. Some trees down and the loss of a young life from a tree or limb on a mobile home.

  4. The author claims:
    “In the United States, major increases in use of renewables electricity generation in some locations have not caused much impact on prices locally”
    He repeats this several times in the article.
    Garbage! Pure military grade garbage.
    He lists the state of MA as 14.2 cents/kWh, but the electric bills clearly show 22 cents/kWh.
    He might say something extra stupid like the difference is because of added charges like the surcharge for “Renewables”, that do not count.
    EXACTLY! They count. The people have to pay that.
    The state of MA is part of a group of states which created the RGGI, the Regional Greenhouse Gas Initiative. RGGI and it’s associated mandates for “renewables” has already pushed up rates across the board, and it is only getting started. The fact that things are going to get a lot worse is unavoidable.
    Last January, MA set A New World Record for the spot market price of natural gas, Highest Ever.
    All due to RGGI. Guess who pays.

    The truth of the matter is that all of this analysis is meaningless drivel. Wind and Solar barely produce as much energy as it took to fabricate them (if that). That dooms them as net energy producers. Add in energy storage (all the rage these days), and your system goes hard energy Net Negative.
    This is exactly what killed the Google (yes, them) Renewable Energy Program. Five years and hundreds of millions of dollars and they were forced to conclude that It Does Not Work.
    And It Will Not Work.

    • MA set a record for NG pricing in Jan primarily because they (all of New England) refuse to build a pipeline or two to bring in more than enough NG sitting just west of them.

      This year the “planners” are stockpiling Diesel to run the grid if NG goes into short supply, which it absolutely will if they have a bone chilling winter as predicted by the Farmer’s Almanac. With the tropical oceans cooling, it is just a matter of time before the globe drops back to temps experienced before the recent warming period started a couple of decades ago.

      • well, I recall a terribly cold last two winters (between installing glass in new downtown highrises November through March- TERRIBLE! and this past winter walking a few blocks from the parking lot),
        coupled with cooler august evenings than I recall in Colorado front range (Denver metro)
        leaves turning already
        snow on the mountains already
        barely above brisk mornings already

        Anecdotal, sure, but it certainly isn’t runaway warming.

      • Joe Bastardi is forecasting a cold, snowy winter for the east US. He’s prb’ly at least as reliable as the Farmer’s Almanac. 🙂

  5. The article admits that, “This paper does not examine subsidies to any degree.” Yet, the body of the article has 22 references to subsidies, which is an indication of how important subsidies are to the topic. So, one must conclude that the article is worthless for drawing any actionable conclusions – except maybe to eliminate all subsidies and allow free-market forces to sort things out (although it could be useful to some as justification for funding more studies, of course).

    And, next time, do include the cost of retiring, dismantling, and disposal of low-performance wind turbines (and solar farms) and restoration of the affected environments.

    • NIK
      A renewable wind or solar installation is a subsidy farm. It only exists because if an investment is made in building and running that installation the government guaranteed rate of return on the investment is far higher and more secure than any other form of investment. Electricity generation is just a byproduct of the subsidy farming.

      As soon as subsidies cease there is no longer any attraction to the investment as its sole purpose has been removed. Therefore, the companies will declare bankruptcy and the directors and investors go in search of other guaranteed returns.

      This also answers your last point. As the subsidy farming companies no longer exist having become bankrupt the cost of “retiring, dismantling, and disposal of low-performance wind turbines (and solar farms) and restoration of the affected environments” will either be met by the tax payers – or more likely the dead turbines and decaying solar farms will remain as monuments to the gullibility of stupid politicians.

    • So, one must conclude that the article is worthless for drawing any actionable conclusions

      I agree. Too bad — the author did a fair amount of research. One would have to quantify the maze of subsidies…..

    • Many articles at the SMH over the weeks about energy etc. One poster, ConcernedVoter, seems to get their posts posted a lot quicker than almost anyone else, and they are long posts with links. Exactly the same posts appear in other articles. I suspect this poster is paid.

  6. Using your graph as true data, it would seem that Iowa is on the path the cheap renewable energy. So if Iowa can do it, no one else can? Your arguments, all in the can. This is one of best blog posts for renewables, though not intended.

    • MidAmerican Energy, another Buffett concubine, is all in the gubment subsidized wind energy, in Iowa, they are a pox on our landscape. The 7+ cent figure exists nowhere that I get a bill,
      a more typical rate is twelve cents, except somehow the regulators got persuaded by the utilities to permit a “summer rate” to be TWO TIMES the normal rate, which will take all the fun out of most business operations.
      Wind has is bad energy policy in almost any metric you want to use, capital costs, efficiency,
      damage (as in death) to migrating birds, bats and raptors, requires other forms of energy for back up, cannot do a black start to the grid due to its reactive component, suffers from low reliability and lifetime issues, and is butt ugly.
      Another con on the taxpayer and rate payer courtesy of the ever present useful idiot.

    • Sure, as long as they can rely on cheap coal (46% of supply) to offset the costs of expensive wind mills.

    • I take you’ve never seen the wind resource map of the US. Knowledge is good–you should try it sometime.

      • ResourceGuy September 5, 2018 10:30 am

        I take you’ve never seen the wind resource map of the US. Knowledge is good–you should try it sometime.

        Faber College graduate perennial undergrad detected.

        • acementhead, replying to ResourceGuy

          I take you’ve never seen the wind resource map of the US. Knowledge is good–you should try it sometime.

          Did yo notice 1/3 of the US lies under the persistent Bermuda High – and has near-zero wind power possible for 330 days of the year?

    • Correct. It is one of the best posts for REs. It’s stiill full of holes, enough to render it a corpse.

  7. But…
    But…
    But…

    IF WE ARE TRYING to moderate the burning of fossil fuels in order to meet essentially unregulated consumer, commercial and industrial demand, AND IF we can agree that one of the more powerful motivations for modifying “behavior” from personal all the way to corporate and federal is by raising (or lowering) the cost of non-preferred energy sources (i.e. “taxation”), THEN this is all just peachy.

    The Danish, Germans, others who have invested, and invested, and invested in solar PV, wind and other renewables, who have closed their “polluting” domestic (as in country, not household) coal and lignite fueled generators (and are thus “off-shoring” the burning of the very same to their neighbor countries which happily sell gigawatts day after day), if their investment both in domestic renewable power and imported “not-in-our-back-yard” fossil power has raised the per-kilowatt-hour price … then by straight macroeconomic means, the impetus on all consumers is a heightened mandate to conserve, if for no other altruistic reason that “lowering one’s power bill”.

    Right?
    So rather than complain, let’s give our European luminaries a hat tip.
    For raising the consumer-price, the product-price of electric energy to their citizens.
    And to their businesses, government offices, municipalities and schools.

    EVERYONE knows not to leave a light burning that isn’t lighting something useful.
    And EVERYONE knows not to turn the heat up, the A/C down, the hot water hotter.

    Right?

    Raise the rates again, I say!
    Deploy legions of hapless gerbils to endlessly run on “fun wheels”…
    Connected to nanoscale quantum generators…
    Wired to The Grid via eensy-weensy room temperature superconducting fibers.

    Right?
    Raise the rates again.
    Macroeconomic pressure will definitely change all consumer behavior.
    Eventually.

    Actually rather faster and sooner than later.
    Just saying.
    GoatGuy

  8. Our average household uses 1000 watts. The first plot suggests the watts per capita is 1000 in some places. I can’t believe anywhere has 1000 watts per capita installed.

    • Remember that renewables have much lower capacity factors than conventional power grids. Solar may be as low as 10% of capacity in Northerly countries, and wind is rarely more than 25% in most places (although a few run to 40%+). So you need much more capcity to produce the same output.

  9. When electricity prices are increased beyond free market competition levels, it is to achieve an objective. The objective needs to be capable of costing, otherwise there is no good way to measure economic success or failure. The costing needs to be part of the economic analysis so that future decisions, like whether to stop or continue, can be informed.
    Australia MacDonald has not included that portion of economic analysis into his paper. As a result, we walk away from it no wiser about answer to the central question. Has this huge disruption of industrial serenity been good or bad, wise or foolish, salvation or disaster? Geoff.

  10. The way I figure it , maximizing your hydro dams and geothermal with the rest going nuclear to provide 100% of your electricity and going 100% electric vehicles will result in your fossil fuel use to drop to as low as 28.6%.

    Don’t forget that of total fuel use, about 40% is residential and commercial consumption. That can all be from nuclear sources. Assuming that of the 28% that goes to transportation , if we went to 100% electric cars ,SUV ,and small trucks , only about 3% would have to be reserved for fossil fuels. Ex: Commercial planes wont be electric for a long long time. That leaves industry use which is the remaining 32%. Since industry uses 3.2 % electricity, that could be easily doubled if the country went massively nuclear. So you would have the remaining 25.6% of economy that is fossil fuel use of industry plus the 3% for transportation fossil fuel. That gives you the bottom line fossil fuel use of 28.6%. I can’t see how you could ever get to zero unless you banned fossil fuels by law. Any attempt to lessen the nuclear portion will simply increase the % of fossil fuels or increase the solar and wind ( with much higher costs than fossil fuels).

    The startling thing here is there is no place for country grid wide installation of wind and solar. Of course individual usage of wind and solar simply takes those customers off the grid. Once the subsidies come off of solar and wind , and massive building of nuclear power plants come on stream; wind and solar will die except for individual use as shown above. Going nuclear will cause electricity prices to stabilize at about 2/3 of the top prices that Australia, Germany and Denmark pay now. I calculated that from the cost of nuclear in France which generates 76% of it’s electricity which is the highest in the world. France for once did something correct. Wind and solar in France are about 6%. I can’t see that increasing much ( despite what the French are saying to appease the IPCC) and only if the massive subsidies are kept on.

    However with nuclear, they have shown the way to the future of energy. Will the rest of the world follow?

    China is attempting to do so but China is actually doing France one better( if you disregard the air pollution problem). In France the massive building of nuclear pushed the price of electricity to 20c per KWhr which is high, but not like Australia,Denmark and Germany. What China is doing; is pushing all forms of energy including many new nuclear plants. Its philosophy is: may the best fuel win. France pushed nuclear mainly, thus the price went up higher than if they had taken the Chinese route. However China has suffered massive pollution problems. The other mistake that China is making is dabbling in solar and wind. Even as China has the most installed solar in the world, their solar still only makes up 2% of the electricity consumption in China ,even though solar is over 7 % of electricity capacity. As for wind , again China has the most installed base in the world and it represents 7.5% of electrical capacity within China itself, but only 5 % of used electricity consumption which is actually less than the US. So the greenie media pronouncements of China leading the way on renewables is only true if you consider NUCLEAR as a renewable.

    • “The other mistake that China is making is dabbling in solar and wind. Even as China has the most installed solar in the world, their solar still only makes up 2% of the electricity consumption in China ,even though solar is over 7 % of electricity capacity.”

      But a few months ago China ceased subsidizing solar, saying the subsidies were costing $15 billion per year, causing a 25% drop in the share prices of solar mfg. and installation companies there.

      • I don’t think using “percent of capacity” is very meaningful because the capacity factors of some renewables is rather low. Onshore wind typically has a “capacity factor” of about 30%, so China would need for wind to be about 330% of usage to run everything with wind. So what? More important is that wind is intermittent and the technology to buffer huge amounts of unpredictable intermittent power at reasonable costs doesn’t really exist. So maximum wind power penetration is rather low if you expect the lights to always come on when you flip the switch.

    • Aren’t the majority of French nuclear power plants reaching their end-of-life, and will have to be decommissioned over the next decade or so? If so, where will France get it’s electricty? Are they building new nukes, or CCGT plants, or (horrors) coal-fired plants?

      • Very true! So, to keep the lights on, or suffer another country-wide revolt…wind and solar etc to the rescue? I don’t think so. One thing I respect the French for is that, when the “state” gets “silly” (Tax etc) the people get “active”. Ne’st pas? Heads lopped!

      • In the US, many end-of-life nuclear plants have been relicensed for additional decades. I assume that the French could probably do the same. But they are French, so God only know what will seem logical to them.

      • Retired_Engineer, I worked at a coal plant, but from that learned that power plants, with some substantial capital replacements, can & do run way past their “expected lives”.

  11. In the UK, I think there were several contributing factors that allowed this foolishness to take root.

    1) Good economic times which engenders optimism and a save-the-planet-at-any-cost type altruism.
    2) The architects of the “New Labour” Party had already deceived themselves before the green salesmen arrived. In the zealous style of new religious converts, they replaced their commitment to a Marxist common ownership of the means of production with a belief that “the market” had magical powers to do things currently deemed impossible.
    3) Following from this, renewables proponents argued that while wind/solar was currently uneconomic, it just needed a push from government to get started. After an initial lubrication with tax-payer monies, industry and the market would then work their magic to drive down costs and set us on the golden path.
    4) The wind/solar industries also had an easier sell because “The Germans are doing it, so the technology must work because the Germans are good at industry, aren’t they?”
    5) The virtuous energy cycle, once established, would be self sustaining and start contributing wealth to the national coffers and no longer need subsidies. Gordon Brown, the Chancellor in Tony Blair’s governments was big on the idea of “public investment”, so this idea was exactly what he wanted to hear.

    Of course, reality had the final word. The technology hasn’t improved sufficiently (probably because it may never do so for base-load generation outside of special circumstances), the good economic times have gone, and wind/solar industry squeals and then dies when the subsidies are withdrawn. They took the money as profits rather than as investment to raise productivity. Not surprising, really, given that there is no magic technology wand as many politicians and activists like to believe, and for-profit corporations are not obliged to also be naïve romantic altruists trying to save the planet.

  12. Australia’s problems with wind and solar are exacerbated by relatively limited state power inter-connectors which are often maxed out and prone to tripping and causing blackouts. I think at the moment the US grid is much more robust. As more states increase their renewables fractions the problems will get worse for the whole country.

    • Where Australia and the US differs is in the distance between conurbations. Brisbane (Lots of K’s away from), Sydney (Lots of K’s away from), Melbourne (Lots of K’s away from) Adelaide, and NOTHING (Nullabor) for lots of K’s, then Perth.

      • Dear Patrick,
        Do you mean Nullarbor (from the Latin for no trees)? Ceduna to Eucla was a pleasant days drive when I last did it, if you didn’t mind starting at 7.00 a.m. and finishing at 10.00 p.m.

        • The new Eyre Highway only touches a small corner of the Nullarbor Plain, so only the railway traverses the actual plain. Lived out there for a while in the 60s.

  13. Use of Averages is not likely to convey an accurate answer.
    The averages have subsidies and taxes baked into the average prices.

    “The total electricity generated by “fuel” types of interest for each state was divided by total electric generation for the state to calculate state-by-state shares of electricity generation mix for each.”

    There used to be a time, when one could easily access from the EIA, subsidies, taxes and tax rebates, to allow accurate electricity generation pricing.

    Then EIA obfuscated, if not obliterated, easily subtracting or even identifying government cost impacts.

    EIA Form EIA-861
    “Beginning in 2011, EIA started collecting monthly green pricing, net metering, and advanced metering data. As of this time, the data are not fully reported by all monthly respondents and are therefore incomplete for some states. Aggregated data only represent totals of the data collected at each of the aggregated levels displayed. Imputation procedures for these data have not been established and therefore total representation for state and U.S. totals is not available.

    Starting in December 2015, EIA began publishing generation and capacity estimates from small-scale solar installations. More details concerning the estimation methods can be found in the technical notes of the Electric Power Monthly.

    In 2017, EIA started collecting non net-metered distributed data on the EIA-861M. This data has been collected on the annual EIA-861 for many years.

    Note: Advanced Metering data (see bottom of page) is no longer collected on form EIA-861M. January 2017 is the last data month in which EIA collected Advanced Metering data.

    Green Pricing data (see bottom of page) is no longer collected on form EIA-826. April 2014 is the last data month in which EIA collected Green Pricing data.”

    Without identifying specific details regarding state and Federal impacts to energy generating systems and sources, it is impossible to truly identify wind or solar’s effects to pricing.

    Additional obfuscations used by EIA fall under “solar thermal collectors” solar”, where home and small business solar thermal collectors are the gifts that keep giving to renewables and EIA.
    1) All installed solar thermal collectors run forever.
    2) Installed solar thermal collectors never suffer downtime, snow, clouds, rain, dust storms, etc. they always operate at full “estimated” capacity.
    3) Average usage, hence average energy savings are “estimated” by EIA.

    Savings that offset “average” costs for solar overall.

    EIA’s numbers overlook or plain ignore total costs each sector of energy generation, especially renewables, actually incur. e.g.:
    * Line conditioners,
    * backup electricity,
    * interconnectors,
    * total land used,
    * damage to wildlife,
    * damage to industrial companies that lose electricity at critical times,
    * etc., etc.

  14. If all energy companies applied a sliding scale price structure then it may be that the effects of ‘expensive’ energy could be mitigated for those who are most vulnerable.
    Starting with a base-supply quantity of xkWhr at a fixed price (based on a national average consumption figure), any energy used thereafter could increase in cost per kWhr in usage bands.
    This gives the low user (pensioners, poor etc) the opportunity to keep within the cheap ‘low band’ and the sliding scale of increased expense would help mitigate wasteful use and ‘limit CO2 production’ ….
    I can’t see how any true CO2-believing/promoting Government could refuse to implement such pricing policies – but failure to implement it would be proof that it’s all about the money and nothing whatsoever to do with the environment.

  15. I just took all the kWh and $ monthly costs for our home electrical service for the past 24 months directly from my TEP web page. I live in Tucson, AZ. The period dates were Sept. 2016 to Aug. 2018. The $/kWh amount is $0.1344!

    Not even close to the numbers in the above paper, of $0.088

  16. The Australian situation with renewable energy sources is that they would hardly be viable if it was not for the subsidies that are given so that they are sustainable. And yes we do export an enormous amount of coal for other countries to burn, but coal is a dirty word here, and with the possibility of closing down more coal fire electricity plant, there is only “politicians talk” of HELE plants. The possible shortages of electrical power in the coming Australian summer are very real. But there is no serious discussion on the introduction/using nuclear energy. It is currently banned from use in Australia.
    As for South Australia (SA) and that state getting approx 35% of its energy from wind, which had a recent supplement with a Elon Musk battery, the discussion above doesn’t mention that SA also get electrical power via an interconnection supply via New South Wales and Victoria.
    Many people make prediction of being 100% supplied by renewable sources by 2045, but most won’t be alive to see if their prediction come to fruition.
    It should also be noted that if you prediction is wrong then your hypothesis is wrong and thus those making prediction that are erroneous have lost their “gotcha” moment. Too bad!

    • Looking at last year’s annual report for one of Australia’s wind farms at Hepburn, it’s clear that the only way the wind farm can make a profit is with the substantial subsidies it receives.

  17. A rather poor study. Comparing electricity prices to a single component (fuel used) is practically meaningless – fuel costs are but one cost of many in producing and distributing power. For example, the fuel costs for a nuclear plant are almost negligible- 3/4th of a penny per kWhr. And while renewables always require backup (even when storage is available) some states import power and don’t need to spend money themselves to provide that backup. Then there are the various labor costs and transmission losses
    that vary across states, further obfuscating any comparisons in prices and causes. Subsidies also have a large effect for solar and wind. Renewableenergy has a low intrinsic value becaus eit is unreliable ad therefore has significant side effect costs – primarilly the need for backup capacity – which is the need for duplicative capacity. Generally that duplicative capacity costs the same as active capacity, minus the fuel savings, which are at times very little, since that duplicative capacity often must burn fuel to remain ready to step in when renewable power fades. Storage does not remove the need for duplicative capacity – storage capacity is finite and the loss of renewable power is not as finite. And if the storage is exhausted, how is it to be replenished? Wind and solar are 18th century technologies.
    Renewables are stupid and complicated methods of producing essentially unreliable power. It should be obvious by now that molten salt nuclear small modular reactors are the future – they not only can provide baseload power, but can load follow, eliminating most of the need for peak power generation capacity.
    They can provide reliable power cheaper than any other method and can be constructed in factories and
    installed quickly, and without any need for cooling water, they can be located practically anywhere. Their environmental footprint is extremely small and they are inherently safe. They are also strongly protected against proliferation. The fact that environmentalists are not flocking to support the development of this technology is proof that they are nuclear-ignorant and do not understand the characteristics of this new nuclear technology. Their views can be considered to be basically superstitions.

  18. There seems to be more to this story than meets the eye. Look at the high costs for New England states such as CT, MA, RI, NH that are mostly using natural gas and nuclear. They are outliers on cost. Which factor is most responsible for the excessive cost?

    Some thoughts: They have no fracking and not a single Republican in the Congressional delegation.

    • Good question. They even get cheap hydro-power imported from Canada. Answer — it has to do SOMETHING w/their socialist goobermints. Prb’ly taxes/subsidies.

  19. Interesting info but I’d like to see charts and data before the addition of the solar/wind generation. I believe (if memory serves me well) that Germany has had expensive electricity rates compared to the US for many decades. It could be that the addition of solar/wind didn’t drive the cost up but rather that the existing high costs made the addition of solar/wind possible.

    • In Australia, the cost of electricity followed the cost of living increases until about 2003, when renewables started to be added to the electricity systems and subsidies were introduced. Since then, the cost of electricity in some Australian states has doubled.

  20. On the face of it, not a very useful study for the US. Comparing individual state costs is not easily comparable to the EU. See this link: https://www.eia.gov/todayinenergy/detail.php?id=27152. For the most part, the supply, balancing, production etc, is accomplished via a large scale multi-state regional system, which have varying capacity inter connects. Factor in subsidies (both visible..ie a bill surcharge, or hidden..ie by tax subsidy), time of use, amount of use, seasonal, etc, and you can readily see how comparing US state of state costs takes much more analysis than is presented via this paper. Due to the inability to dispatch solar or wind power (which requires backup from more reliable sources), “hidden” (from your electric bill) subsidies, and poor capacity factors (ie high installed capacity cost relative to delivered capacity) the actual delivered cost of power and wind power is and will remain very high relative to other sources. Until the actual cost of reliable wind/solar (ie the combined actual cost of the power plus backup) power drops to other sources, it will always required either massive subsidies, or mandated use.

    The actual cost of solar/wind is:
    Actual capital cost to install plus
    Cost to operate plus
    Actual cost of near 100% backup

    Bottom line: Expensive.

  21. If this study didn’t account for the impact of subsidies, then I don’t see how it has any value. Cost and price are not the same thing. If Iowa has subsidies to utilities to negate the impact of higher costs, to keep the price to consumers low, then the amount of the subsidies has to be included as part of the cost to consumers.

  22. Colorado will be a great place to watch what renewables will do to electricity prices. Our state Public Utilities Commission just approved a plan for Xcel Energy to decommission two coal plants at least a decade early, and install a bunch of solar and wind power, and one new natural gas facility. Of course, it was because of the subsidies. “Xcel Energy has a fiduciary duty to get any and all subsidies it can.” Even though testimony showed that Xcel’s math is bad saying it will be cheaper for customers in the long run (no it won’t!), the PUC approved the plan. Grrrrrr.

  23. What’s going on with Wyoming data?

    Ditto to the lone previous commenter noting the cost of subsidies as a mask for higher prices. Illinois has had to add subsidies to nuclear to keep the back up in operation. That is a cost of wind energy as well. Other than that, the data seem to reflect that our individual states policies / politics are a more important factor in price than energy source.

  24. The electricity costs to the user are determined or “approved” by the utilities commissioners, not the utility operators. By politicians, in other words. Billed prices then are not comparable even with the same power supplier and types of power plants. Besides, the cost and charges change during a year, some two or three times.
    Concerning renewables, there are subsidies, tax breaks, credits, deferred payments, etc. it is much too hard to determine the free market kWh cost. The price that covers only the expenses of the power station for selling its electricity to the grid, such as employee salaries, taxes, fuel, dividends payments, debt servicing, amortization, pensions, etc. seems to be the only comparable criterion. That cost has been fluctuating between 2 to 3 c/kWh here in Connecticut, as an example. I’ve never heard of renewables paying any of these expenses that influence the $/kWh.
    To expand, when someone says “my electricity costs ….” does it mean the bottom line on the monthly bill? Or just the generation portion? Or the value at the power station exit? Are the social and other charges included? Is the amount a monthly or annual average? Or several years average? If a short term, then for which season – spring, winter? My residential rate changes 2, 3 times a year ranging between 8 and 14 cents. Complications include discounts for the quantity (CT0 or increases as in CA).
    Can we really know much does wind or solar electricity cost? Unless the cost is itemized in detail, and specify the period and region, the numbers are largely meaningless.
    Then comes the cost comparison among nations that must reflect the dollar exchange rate. That also changes all the time. And the above listed cost items included in the bill are not the same as in the US.

  25. Not all that long ago Oregon was running ~ $.03/kwh for industrial and $.06/kwh for residential. Now we average $.056 for industrial and $.098 residential. Not quite doubling our rates to meet the stupid 25% renewables by 2025 mandate our local masters put us on. This in a state that’s had cheap electricity for a long time due to hydro.

  26. It would be interesting to see governments with renewable mandates end all government subsidies for all electricity production. If the government, especially the USA, wants to spend money on electricity they should spend it on updating and harding our national grid. For example, we first heard of hackers getting into the systems over a decade ago, yet again this past year we are told the system is vulnerable.

    While this paper admittedly makes not attempt to address the long term environmental cost of installing “enough” renewable to make states or countries 100%, it is still an extremely important issue. It must be considered now as one of the decision elements for policy makers. I have argued with environmentalists that don’t understand that wind farms are no longer green spaces with the same ecological components. Large solar arrays are even worse. I understand from a friend that managed a large solar array, they require a large amount of water to keep them clean in order to maintain efficiency. The solar array he managed was in a near desert environment. In areas where there is enough rain fall to help rinse the dust and pollen off the arrays those same rain clouds reduce efficiency sometimes for relatively long periods of time.

    • If the entire United States were to go 100% wind and solar powered (no back up from FF, hydro or nuclear) AND converted to 100% electric vehicles, my math showed that you would need to cover 43% of the U.S. with these bird killers (18% for power generation, 14% for recharging electric cars and 1% for charging stations every few miles) AND very long inter-connectors like Oz And you would still have blackouts…(and chop down a whole lot of trees to make room)…Unfortunately my laptop overheated and died while doing this equation, so I cannot provide details of my computer model !! ) ( :

  27. The use of average prices in the US generated lots of useful comments. Looking at more localized impacts would be useful, and that would be worth pursuing but would take a bit more work. Will try for an add-on set of results that at least looks at sectoral averages. This was supposed to be a cursory look, so the desire for more is understandable, but one step at a time. The US data point is compared to Europe in the text, at about 8 Euro cents/kWh and 6.5%. Interesting discussion. The intent was to stir up more discussion about where the electric supply should be headed vs where it has been and what has happened. The trend line in the first figure cannot be deciphered from the units presented, which was actually the impetus for putting this together, to provide a look at prices where the trend line actually matched the units. Iowa appears to have over 4,000 W/capita of wind generation installed . . .

  28. It’s not realistically possible to eliminate most all of our carbon fueled sources of electricity without a strong commitment to nuclear power.

    But advocates of the renewables, especially those living in California, claim that the technology needed to reach at least 70% wind and solar by 2030 exists today. And to do it without nuclear.

    It’s simply a matter of making the necessary investments. Or so they say, including former Pacific Gas & Electric CEO Anthony Early, who played a key role in PG&E’s decision to close the Diablo Canyon nuclear plant by 2025.

    California is a rich state. Californians can well afford to experiment with pushing the cost risk envelope in expanding their reliance on wind and solar energy. A majority of Californians, rich and poor alike, want greater reliance on wind and solar. This makes California an excellent candidate for demonstrating what 70% reliance on the renewables might actually cost.

    Californians should put their money where their mouths are and guarantee a 12% annual rate of return on all new-build wind and solar facilities constructed in their state — including construction of the energy storage facilities needed to cover those days when the wind doesn’t blow and the sun doesn’t shine.

    If it takes some combination of direct and indirect subsidies from California state government to reach the 12% target rate of return, then so be it. If it takes a suspension of California’s environmental review processes to reach 70% renewables by 2030, then that’s what it takes.

    Just do it, Californians.

  29. Many US states apply a sales tax to the electricity bill and that tax rate could be as high as 10 percent. The same would apply to adding rooftop solar equipment and batteries. So any change that raises cost to replace other sources while raising average price will also raise taxes. Not sure how that applies in the VAT-lands of Europe. Denmark (lego land) loves high taxes and high costs but they do have lower transmission costs than trying to do continental scale development, except for the extra costs of offshore transmission and maintenance.

  30. Federal subsidies for wind and solar generation in the United States have been substantial over decades, and the costs of federal subsidies are spread across the country and mostly do NOT show up in electricity price.

    In the US, one dollar out of every two spent is not real money but Chinese debt.
    The whole concept of money is on the verge of collapse.

  31. It would be better to do a panel rather than a cross section. Take California, for instance, where average electricity prices have increased nearly 50%. The increase in average prices would be due to the expense of building transmission, and the expense of keeping now-underutilized thermal or high heat rate combustion assets on line to back up the renewables.

  32. My former company had a contract with Hawaii to supply LNG for power production which would have allowed my former company to expand their production and supply more of this cleaner fuel to other Pacific islands. Unfortunately the governor in Hawaii changed and the new governor cancelled the contract as soon as he was in office. Declaring that he state of Hawaii was going to total renewable energy and getting off of fossil fuels. Most of Hawaii’s power is derived from large simple cycle gas turbine generator units running on bunker fuel for most of the production. The units start up on diesel fuel and switch to bunker once they are warmed up. Though burning bunker is mostly a cost saving for the power company it comes at the price of a reduction in the power output of the gas turbine. The turn down is from 25% to 15% of the total output of the unit when operating on bunker fuel and the maintenance cost increase dramatically. This does not include the extra down time involved in repairing the combusters and hot sections of these turbines from using this heavy fuel. The study done by all parties showed that burning LNG in these units would give them an increase in output to the tune of almost another unit for the island of Maui. As it stands now when the wind stops blowing on Maui there is an increased chance of black outs and brown outs during high peak demand on hot days. The study also showed that the power utility on Maui needed to install another gas turbine unit to meet the demand by 2020 or else the power interruptions would become more frequent. The new unit order was cancelled after the contract for LNG was cancelled.

  33. Looking further at residential electricity costs in the US, and using total expenditures divided by total kWh as the residential price, leads to higher prices in the second figure, but the figure still looks almost the same. The values for CA and VT (statewide ratios) were both 19.4 cents per kWh. So as of 2016, there was not a discernible US trend of increased prices due to wind and solar generation fraction, even for the residential sector. The situation is changing, so 2018 may have some differences, but subsidies and the ability to send wind+solar electricity to the most profitable locations appear to be making these renewable sources work OK for now (maybe as long as the national fraction is below 10%, and as long as subsidies can be buried somehow in accounting).

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