Reposted from The MANHATTAN CONTRARIAN
The promoters of the climate scam have a variety of deceptions to get the gullible to accede to their socialist plans. Those deceptions range from the quite sophisticated to the completely preposterous. At the sophisticated end of the scale we have what I have called The Greatest Scientific Fraud Of All Time — the deception by which 50 and 100 year old temperature records are altered (reduced) by impenetrable computer algorithms to make it seem like global warming has been much greater than the reality. At the preposterous end of the scale we have the claim that the fashionable “renewable” sources of electric power, wind and solar, are actually cheaper than fossil fuels to generate electricity.
I call this claim preposterous because the fundamental deception is so obvious that you would think that no one of any intelligence could possibly fall for it. And yet you have undoubtedly read numerous articles in the past few years asserting that wind and solar-generated electricity is now as cheap or cheaper than electricity from natural gas or coal. To make the claim, the promoters of wind and solar simply omit from their calculations the single biggest part of the cost of those sources. That would the cost of intermittency, otherwise known as the cost of providing sufficient backup or storage to run a stable electrical grid while generation from the wind and sun fluctuates wildly. (As wind and solar become a bigger and bigger part of power generation on the grid, the cost of necessary backup and/or storage could easily multiply the cost of electricity by a factor of five or more. For instance, see my post here.).
To divert your attention from this elephant in the room, somebody has come up with the concept of “levelized cost of energy,” or LCOE, supposedly to make fair apples-to-apples comparisons of the total costs of one energy sources versus another. There are seemingly sophisticated and technical discussions of life cycles and discount rates. But then, when putting a cost on wind and solar, they just completely omit the costs of intermittency. I suppose they hope that you won’t notice.
If you don’t believe me, check out this Wikipedia piece on “Cost of electricity by source.” The piece cites some five studies of comparative costs of different generation sources. The five studies come from Bloomberg New Energy Finance, Lazard, the International Renewable Energy Agency, the IPCC and OECD. Representative of the conclusions reached is this from BNEF:
In March 2021, Bloomberg New Energy Finance found that “renewables are the cheapest power option for 71% of global GDP and 85% of global power generation. It is now cheaper to build a new solar or wind farm to meet rising electricity demand or replace a retiring generator, than it is to build a new fossil fuel-fired power plant. …
Feel free to click through to verify my assertion that they simply omit all costs of intermittency when calculating the costs of generation from wind and solar.
The state of Texas, with its own power grid separate from the rest of the country, has been a leader in developing generation capacity from the intermittent renewables, particularly wind. While production from these facilities can vary greatly from month to month (depending on wind conditions), in typical months Texas has been getting about 20-25% of its electricity from wind and solar. (It was 23% in October 2020.). Then came February 2021, when Texas had a record cold spell, and the wind and sun died for several days running. Some natural gas and nuclear facilities were also out during that period. The result was a tremendous spike in spot market prices and rolling blackouts imposed by the grid operator (known as ERCOT).
Apparently the February event has caused some people in Texas finally to wake up to the issue of the true costs of the renewables. In March a bill called SB 1278 was introduced in the Texas state senate by Senator Kelly Hancock of Fort Worth to require the renewable generation sources to bear the extra costs imposed by their intermittency. Here is the relevant language of the proposed statute:
“[ERCOT] shall ensure that ancillary services necessary to facilitate the transmission of electric energy are available at reasonable prices … [and] ancillary services costs incurred by the ERCOT … to address reliability issues arising from the operation of intermittent wind and solar resources must be directly assigned by the ERCOT … to those resources. . . .”
The bill passed the Texas State Senate on April 14 by a bipartisan vote of 18-13. However, the bill got held up in the Texas House of Representatives, and apparently the legislature has now adjourned without further action on the bill. Nevertheless, it appears that the legislature has a good deal of unfinished business, and will be called back into special session at some point later in the year.
The delay has given renewables advocates a chance to regroup. A piece on May 17 at something called Utility Dive gives many of these advocates a chance to present their arguments. Most of them are BS. But I think there is a significant flaw in the language of the bill as drafted, which is that it puts the burden on the regulator, ERCOT, to figure out what particular costs are attributable to intermittency issues. That task is not necessarily so easy to do with precision in a mixed system of fossil fuel and renewable sources. A guy named Michael Jewell of something called Conservative Texans for Energy Innovation makes the point when he says this:
“[C]ost causation here is unclear because reliability needs vary with customer demand and, like wind and solar, traditional generators can [also] go offline.”
A far better structure would be for the grid operator to set up a bidding system where bidders offering power from wind and solar sources must combine their bids with sufficient backup and/or storage to provide some fixed amount of firm power over some reasonable period of time, say 24 hours. In a post back in July 2018 I phrased it this way:
[T]he grid operator should seek only offers of power that are firm and reliable for some reasonable period, say 24 hours at a time. If you want to sell wind power to the grid operator, it’s then on you to also provide the mix of backup sources (could be fossil fuel power plants, could be batteries, could be whatever else you come up with) to make your offer reliable for the requisite period.
With that market structure, the wind and solar operators themselves would be required to recognize and calculate the costs of the intermittency of their assets. The structure would also give those operators the incentive to reduce the costs of intermittency (that is, of backup and/or storage) to the extent they can.
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Good discussion but this statement is wrong, “The state of Texas, with its own power grid separate from the rest of the country”. Texas has 5 DC ties to the US and Mexico.
From ERCOT DC tie operating instructions,
There are two (2) commercially operational DC-Ties between ERCOT and the Eastern Interconnection:
• North (DC_N) located near Oklaunion
• East (DC_E) located near Monticello
There are three (3) commercially operational DC-Ties between ERCOT and CFE:
• Eagle Pass (DC_S) located near Eagle Pass
• Railroad (DC_R) located near McAllen
• Laredo (DC_L) located near Laredo.
They are 220 mw 600 mw 36 mw 150 mw and 100 mw.
If you look at the map in the document at http://www.ercot.com/mktrules/guides/procedures/ERCOT%20DC%20Tie%20Operations%20V3Rev8.doc
It graphically shows connection around the state.
Surrounding states were not quite a bad off as Texas last February (they all have a smaller percentage of “renewables” penetration) but they had no excess to sell to Texas.
Nice idea, shame it will not work.
Electricity generation follows load, which is not forecastable hours in advance. Consequently forcing anyone to guarantee a certain level of generation hours or days in advance as proposed is simply nonsense unless you can also guarantee load hours or days in advance. No happening.
Requiring generators to honour their bids is not a bad start and requiring electricity retailers to have sufficient firm contracts in place to supply their customers is another good idea. Both can be achieved through standard contract conditions including penalties, leaving the market to sort out the mechanisms
For instance, if the wind dropped during a bid period a wind farm would be on the hook for either substantial penalty payments for failing to deliver or would call on a firming contract to make up the difference. If rolling power cuts were introduced due to lack of supply the electricity retailer would be required to compensate those who were cut off for their losses. Value of Lost Load figures in Australia are around $35,000 AUD per MWh which gives an idea of what retailers should be up for.
It would be interesting to analyse the generator market trend in the countries where people have to endure renewable power generation intermittency :
https://www.fortunebusinessinsights.com/industry-reports/portable-generator-market-100155
With not only financial consequences but also increased true air pollution (not the EPA fake CO2 pollution) due to suboptimal electricity generation.
They’ll find out the cost of intermittency soon enough, when they get near 100% wind/solar.
They will never get close to 100% wind/solar.
This pipedream will blow up in their faces long before then. It looks like it’s blowing up a little bit now, at 25% wind/solar.
Wind and solar have zero ability to respond to load demand at any time of day or year. They produce completely independently of consumer demand. That alone should rule them out. Cost is irrelavent. They are unsuitable.
The energy source is the slave to the load in every electrical circuit, not the other way around.
The damage to the environment by installing large scale wind and solar are never counted.
The elephant in the room is that there is not now, nor was there ever, a valid reason to introduce Ruinables into our electricity supply, and without the “carbon” scam, they never would have been.
HIGH COSTS OF WIND, SOLAR, AND BATTERY SYSTEMS IN NEW ENGLAND
https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-solar-and-battery-systems
This article shows there are at least 6 major categories of cost of wind and solar.
Per standard Wall Street practice for tax-shelters, the cash value of the subsidies is about 45% of the project turnkey cost, which includes the costs of:
1) Financing,
2) Subsidies,
3) Owner’s return on investment.
The subsidies are “front-loaded”, i.e., about 40% is recovered by GMP in the first 5 years, the other 5% in the remaining years, i.e., skimming the fat off the milk in the early years, and long-term increased costs for ratepayers and taxpayers.
https://solarplusllc.com/macrs-and-bonus-depreciation/
https://norwichsolar.com/vermont-commercial-and-industrial-solar-incentives/
https://vermontbiz.com/news/2019/october/22/owner-gmp-and-vermont-gas-will-get-new-ceo
EXCERPT:
Cost Shifting from Owners to Ratepayers and Taxpayers
The owning and operating cost of wind, solar and battery systems, c/kWh, is reduced by about 45%, due to subsidies. However, because no cost ever disappears, per Economics 101, the subsidy costs are “socialized”, i.e., added, in one way or another, onto:
1) The rate bases of utilities, i.e., paid by ratepayers
2) Taxpayers, by means of extra taxes, fees and surcharges on electric bills and fuel bills
3) Government budgets
4) Government debt
5) Prices of goods and services other than electricity
If the subsidies had to be paid by owners of wind and solar systems, the contract prices paid to owners would need to be:
– At least 19.3 c/kWh, instead of 11 c/kWh, for large-scale solar
– At least 15.5 c/kWh, instead of 9 c/kWh, for ridge line wind. See table 1 and URL
http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-name-of-the-game-regarding-wind-and-solar
Shifting Grid Costs
Many small-scale solar systems and/or a few large-scale solar systems on a distribution grid would excessively disturb the grid, especially at midday. Battery systems, with sufficient capacity could counteract the output variations of those solar systems.
Wind and solar systems could not be connected to the grid without the services of the CCGT plants, i.e., shutting down CCGT plants, and artificially diminishing/obstructing their domestically produced gas supply, advocated by pro RE folks, would not be an economic option for decades, if ever, because of the high costs of battery systems.
1) The cost of extension/augmentation of electric grids to connect widely distributed wind and solar systems (not paid by wind and solar system owners)
2) The cost of services rendered by other generators, mostly CCGT plants, which counteract the ups and downs of weather/season-dependent, variable, intermittent wind and solar outputs, 24/7/365 (not paid by wind and solar system owners).
3) The cost of battery systems to stabilize distribution grids, due to variations of the solar and wind system outputs (not paid by wind and solar system owners).
Shifting Owning and Operating Costs
The combined effect of cost shifting, determined behind closed doors, increases a project’s annual cash flow, i.e., “left-over-money”, to provide an ample profit for the RE system owner.
RE system owners are happy, having the “ears” of friendly politicians, saving the world from climate change, and claiming: “See, my project is profitable and competitive”, while everyone else gets hosed.
1) Grants from various sources, such as the VT Clean Energy Development Fund
2) 26% federal investment tax credits, plus state FITs. Tax credits reduce, dollar-for-dollar, the taxes GMP pays on profits
3) 100% depreciation over 5 years; the normal for utilities is 20 to 25 years. Write-offs reduce GMP taxable income
4) Deductions of interest on borrowed money. Interest deductions reduce GMP taxable income.
5) Various O&M payments are waved, such as sales tax, fees, property tax, school tax, municipal tax, etc.
6) RE system owners sell their output at two to four times NE wholesale market rates, which have averaged about 5 c/kWh starting in 2009, courtesy of:
– Low-cost, low-CO2, very-low-particulate, gas-fired CCGT plants
– Highly reliable, very-low-CO2, zero-particulate, nuclear plants
– Low-cost, very-low-CO2, zero-particulate, hydro plants Canada.
All-in Cost of Wind and Solar
Pro RE folks always point to the “price paid to owner” as the cost of wind and solar, purposely ignoring the other cost categories. The all-in cost of wind and solar, c/kWh, includes:
1) Above-market-price paid to owners
2) Subsidies paid to owners
3) Owner return on invested capital
4) Grid extension/augmentation (not paid by owners)
5) Grid support services (not paid by owners)
6) Future battery systems (not paid by owners)
Comments on table 1
– The owners of legacy systems were paid much higher prices, than owners of newer systems.
– Vermont legacy “Standard Offer” solar systems had greater subsidies, up to 30 c/kWh paid to owner, than newer systems, about 11 c/kWh
– Wind prices paid to owner did not have such drastic reductions as solar prices.
– Vermont utilities are paid about 3.5 c/kWh for various costs they incur regarding net-metered solar systems
– “Added to the rate base” is the cost wind and solar are added to the utility rate base, which is used to set electric rates.
– “Traditional cost”, including subsidies to owner and grid support, is the cost at which traditional is added to the utility rate base
– “Grid support costs” would increase with increased use of battery systems to counteract the variability and intermittency of increased build-outs of wind and solar systems.
NOTES:
1) The prices should be compared with the NE wholesale grid price, which has averaged about 4.2 c/kWh, starting in 2009, due to low-cost CCGT and nuclear plants, which provided at least 65% of all electricity loaded onto the NE grid in 2019.
– Wind, solar, landfill gas, and methane power plants provided about 4.8%, after 20 years of subsidies
– Pre-existing refuse and wood power plants provided about 4.6%
– Pre-existing hydro power plants provided about 7.4%
– The rest was mostly hydro imports from the very-low-CO2 Canada grid, and from the much-higher-CO2 New York State grid
https://www.iso-ne.com/about/key-stats/resource-mix/
https://nepool.com/uploads/NPC_20200305_Composite4.pdf
2) There are O&M costs of the NE grid, in addition to wholesale prices.
ISO-NE pro-rates these costs to utilities, at about 1.6 c/kWh. Charges for:
Regional network services, RNS, are based on the peak demand occurring during a month
Forward capacity market, FCM, are based on the peak demand occurring during a year.
3) Each local utility has its own O&M grid costs, in addition to item 2, some of which are detailed on electric bills.
4) Vermont utilities buy electricity from various sources; average cost about 6 c/kWh, plus ISO-NE charges of about 1.6 c/kWh, for a total of 7.6 c/kWh.
See table 1 in article, which I was unable to post in this comment
Don’t get Chuck Norris started.
I already costed this 2 years ago. It isn’t so hard to get close to reality. 10 x the LCOE cost if including battery backup in the UK. Pumped storage is cheaper on LCOE because it lasts longer. £50Billion per TWh for both. Presented as a cost of the grid. Only necessary because of renewable intermittency. Turbine interia delivers enough stability for free for a dispatchable energy powered grid. JUst a tint bit of pumped storage to cope with emergencies and grid rebooting
The reality doesn’t change because what controls this are the laws of physics, not the laws of men (should that be “people” now?), that can only distort markets at the expense of consumers, to the profit of insiders. It is here….
http://dx.doi.org/10.2139/ssrn.3274611
“An electric read”, Puns Weekly. “The public must not be allowed to read this paper” Renewable Energy Federation. “It helped me a lot, really effective ” Insomniacs UK.
“If you can get through the winter on nuclear…. you don’t need renewables” Sir David MacKay FRS, Chief Scientist to the UK DECC 2008 – 2014. Words of wisdom.
“The reality doesn’t change because what controls this are the laws of physics”
A lot of these politicians seem to think that if it’s a “law” they can legislate a change in it, even laws of physics.
Hopefully, Randall Mills will save us from the Leftist Luddites.
Many companies use Service Level Agreements (SLA) where the paying party states what they expect. The supplying party agrees to supply said amount and if you can not meet the SLA levels you pay a cost. When structured well, SLAs provide an easy to understand performance and cost parameters for any business contract.
Texas does not hold utilities liable when they fail to deliver enough electricity. Penalizing companies that do not produce a contracted minimum would solve a lot of problems. Texas also pays for wind and solar generation even when it’s not needed. Fix that as well.
They count on people not bothering to do basic Math. In the Wiki for Cost of Electricity by source they have “solar PV (fixed) – $1060/kW (utility)”. However this needs to be combined with battery storage which is “battery storage power – $1380/kW.” However, if you are generating 1 kW for use you need to generate a second kW for storage. This gives a final cost of combined solar/battery of $3500/kW.
The same weather pattern that causes major heats waves usually results in very little change in the surface pressure gradient. Little to no wind! Plenty of sun though.
In the winter, you never know. For sure a very weak, low angled sun…..and less of it compared to summer but the wind is extremely variable.
Yeah, that’s exactly the problem.
I like that idea – the total cost of variable fuel source generation (including the costs of spinning reserve)
U.S. Energy Information Agency
June 23, 2021
Most U.S. wind capacity built since 2011 is located in the center of the country
it is an interesting idea but has several operational problems:
1) It requires non-renewable energy sources to be operated by renewable energy providers.
2) Calculation and attribution is extremely difficult and slow. This is a particularly an issue when trying to calculate to 24, 72 or even 1 week windows.
What would be a lot easier would be monthly or quarterly capacity factor commitments – failure to deliver which would allow the utility to pass through its higher costs to providers in the form of reduced payments.
Yes, this would not solve the recent Texas freeze issue but would at least be both transparently manageable and – primarily – create an outlet and incentive for all power providers to have some consequence to failures.
Sometimes that’s all that can be reasonably done.
The ginormous ripoff of Texas taxpayers and ratepayers: