Resources for the Future: Retail Electricity Rates Under the Inflation Reduction Act of 2022

Roger Caiazza

Resources for the Future (RFF) has published an Issues Brief titled Retail Electricity Rates Under the Inflation Reduction Act of 2022.  According to the report the Inflation Reduction Act (IRA) legislation, will “save typical American households up to $220 per year over the next decade and substantially reduce electricity price volatility.”  This setoff my BS detector so I got some data from Texas to see if the state with the most total renewable energy production has seen reduced costs from their wind and solar development.

I am not going to address the IRA provisions directly.  The Institute for Energy Research described the huge renewable tax incentives and subsidies earlier this week.  Anthony Watts applauded the Wall Street Journal and Bjorn Lomborg for showing how useless the IRA is at tackling climate.  The RFF report was one of the analyses that alleged that the IRA would benefit consumers and I will focus solely on that.

RFF analyzed the effects on the crucial electricity sector using their in-house Haiku Electricity Market Model to “project electricity retail rates for a range of potential scenarios that account for variability in future fuel prices, capital and technology costs, and uptake of specific provisions of the legislation.  The analysis found that if the legislation is passed:

• Retail costs of electricity are expected to decline 5.2-6.7 percent over the next decade, saving

electricity consumers $209-278 billion, given expected natural gas prices.

• The average household will experience approximately $170-$220 in annual savings from smaller electricity bills and reductions in the costs of goods and services over the next decade.

• Ratepayers are insulated from volatility in natural gas prices, with electricity rates projected to

decrease even under a high natural gas price scenario.

• 2030 electricity sector emissions are projected to drop to 69.8 percent to 74.9 percent below 2005 levels, compared to 48.5 percent below 2005 levels without the policy.

The RFF Haiku model analyzes regional electricity markets and interregional electricity trade in the continental United States.  It is all the rage for consulting companies to develop an in-house model suitable for projecting future electric system resources.  RFF claims that:

“The model accounts for capacity planning, investment, and retirement over a multi-year horizon in a perfect foresight framework, and for system operation over seasons of the year and times of day. Market structure is represented by cost-of-service (average cost) pricing and market-based (marginal cost) pricing in various regions. The model includes detailed representation of state-level policies including state and regional environmental markets for renewable energy and carbon emissions and frequently has been used to advise state and regional planning.”

I have had to deal with these electric production and costs models for over 40 years. I cannot over emphasize that even the most sophisticated of these models have difficulties dealing with the generation capacity needed for peak loads and the intricacies of the transmission grid.  The Haiku Electricity Market Model documentation shows that the model is so simplified that I don’t think it can get reasonable projections correct.    For example, the model simulates the contiguous United States with 21 regions and calculates the transmission between those regions in order to estimate capacity requirements.  New York alone has eleven control areas and the transmission constraints for those areas and adjoining regions are needed to accurately estimate generating resource needs.  All the little constraints that are averaged out in the RFF model mask a major portion of the capacity requirements and energy needs that under-estimate costs.  This is a particular problem as more and more wind and solar energy resources are added to systems.  The RFF model and others like it have consistently under-estimated the emission reductions from fuel switching from coal and oil to natural gas electricity production and I think they are under estimating the difficulty replacing natural gas generation with wind and solar.  Moreover, somebody, somewhere has to account for the intermittent nature and lack of ancillary services from wind and solar.  I don’t think a simple model can capture those costs.

On the other hand, if adding renewable resources in certain jurisdictions has led to lower costs then my reservations are wrong.  According to a recent US News and World Report article Texas produces produce the most total renewable energy (millions of megawatt-hours), according to the U.S. Energy Information Administration.  That article notes that: “In the first quarter of 2022, Texas led all states in overall renewable energy production, accounting for over 14% of the country’s totals, due in large part to the state’s prolific wind energy program”.

The United States Energy Information Administration (EIA) Electricity Data Browser  enables a user to access electricity generation and consumption data as well as electricity sales information.  The data can be filtered as needed.  I filtered the data to look only at Texas data.  I downloaded the monthly total net generation (GWh) and the net generation from just renewable resources so I could calculate the percentage of renewable generation energy.  Then I downloaded the average monthly residential average price of electricity.  The following graph shows the results.  The residential cost of electricity has been increasing steadily since 2001.  The percentage of renewable energy has increased from almost nothing in 2001 to recent months over 30%.  I am not seeing that the deployment of renewable resources produced a reduction in costs.

Texas Monthly Residential Electricity Price and percent renewable generation

In conclusion, the Texas data do not show that renewable energy deployment reduces costs.  The RFF projections that the IRA will reduce costs due to renewable development are very unlikely because the overly simplified model cannot reproduce the features of the electric system that lead to higher prices from intermittent wind and solar resources.

—————————————————————————————————————————————

Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  More details on the Climate Leadership & Community Protection Act are available here. This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.

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John Garrett
August 11, 2022 2:12 pm

My eyes rolled and I stopped reading the minute I saw these ridiculous assumptions:

• Retail costs of electricity are expected to decline 5.2-6.7 percent over the next decade, saving electricity consumers $209-278 billion, given expected natural gas prices.

• The average household will experience approximately $170-$220 in annual savings from smaller electricity bills and reductions in the costs of goods and services over the next decade.

• Ratepayers are insulated from volatility in natural gas prices, with electricity rates projected to decrease even under a high natural gas price scenario.

MarkW
Reply to  John Garrett
August 11, 2022 3:00 pm

No matter how many times those lies are refuted, they keep trotting them out.

Retired_Engineer_Jim
Reply to  John Garrett
August 11, 2022 3:20 pm

Those are not assumptions – those are the results from their model. They are projections. To some, who don’t know anything about this, they are The Truth.

Chris Hanley
Reply to  Retired_Engineer_Jim
August 11, 2022 5:12 pm

To some, who don’t know anything about this, they are The Truth.

Politicians albeit well-meaning but laughably naive treat computer models as if they were independent authorities, the modern equivalents of ancient oracles.

The Real Engineer
Reply to  Chris Hanley
August 12, 2022 12:26 am

We already knew that politicians are idiots, the amazing thing is that they keep proving it to us again and again.

The Real Engineer
Reply to  Retired_Engineer_Jim
August 12, 2022 12:24 am

These models need to be fully documented to have any value, and all the reasons for any simplifications fully explained. This will never happen of course, because any competent person could quickly rip the whole lot apart and expose the so called “modellers”. That would never do!

roaddog
Reply to  John Garrett
August 11, 2022 6:23 pm

Government bureaucrats have a demonstrated inability to reduce the cost of ANYTHING. 20% of US aluminum manufacturing capacity is currently shuttered, because of the dramatic increases the Biden administration has produced in the cost of electricity. Whose picking up the slack? China. Of course.

roaddog
Reply to  roaddog
August 11, 2022 6:24 pm

Just a reminder…Obamacare will reduce the average American family’s healthcare cost by $2,500 a year.

LdB
Reply to  John Garrett
August 11, 2022 6:55 pm

Wish we could bet on these numbers coming true. Anyone who believes that I have a few bridges to sell.

Rud Istvan
August 11, 2022 2:34 pm

Renewables (wind) CANNOT reduce electricity rates, period.

The EIA LCOE has since at least 2015 claimed on shore wind was at parity with CCGT. This is simply false, based on deliberately bad underlying assumptions. The worst is that EIA explicitly assumes both have useful capital lives of 30 years. That is at best gross negligence, at worst deliberate prevarication. The modern on shore big wind turbines (~2-3 MW each) have at best 20 year lives. The problem is inherent in the uneven axial bearing loading since wind at the top has a higher velocity than wind at the bottom. Axial bearing failure is sudden death, and for an older turbine not worth a very expensive repair. CCGT has at worst a 40 year life (GE warranty). And in practice 45-50.

Some years ago (2016 IIRC) over at Judith’s I posted ‘True cost of wind’ illustrating then fixing the basic obvious EIA errors. The result was CCGT LCOE about $58/MWh, while wind (based on the Texas ERCOT grid at then about 10% penetration) was $146/MWh.

No amount of IRA incentivizing or Biden pontificating can fix the basic problem that wind is MUCH more expensive. And this is also easily demonstrated for Europe without EIA LCOE annuity calculations by simply graphing wind penetration versus retail electrify rates by country. A very strong positive linear correlation. Higher penetration always means higher rates.

Reply to  Rud Istvan
August 11, 2022 3:58 pm

LCOE distortions include

Excessive lifespans for windmills and solar panels
(20 years for huge windmills in salt water = wishful thinking)

Maintenance of windmills and solar panels,
including keeping them clean

Too short lifespans assumed for natural gas, coal and nuclear power plants

Full new transmission line costs and right of way legal delays

Grossly insufficient battery backup capacity (the big “money saver”)

The cost of utility customers buying generators, flashlights and candles for backing up a significantly less reliable grid (I’m not kidding)

Nut Zero is the unaffordable, infeasible vision (not a detailed “plan”) to spend a lot of money to make electric grids less reliable. Managed by leftists, with a reputation of ruining everything they touch, Electric grids will not be the first exception.

Last edited 1 month ago by Richard Greene
Reply to  Rud Istvan
August 11, 2022 4:57 pm

Rud,

I have always wondered whether wind speed differences would be a problem and your explanatin that there is an inherent problem in the uneven axial bearing loading since wind at the top has a higher velocity than wind at the bottom. It gets worse because at night these giant wind turbines are going to be in calm winds near ground and in the high winds of the nocturnal low-level jet at the top of the blades.

Thanks,
Roger

EdA the New Yorker
Reply to  Rud Istvan
August 11, 2022 6:29 pm

The nearly complete failure of cuomo’s thruway windmill fiasco was a testament to wind shear. His effort to save face the New York way by suing everybody in sight came to an end, with the judge noting that cuomo was specifically told to check the wind shear of the siting, but did not. His other massive scandals distracted New Yorkers from seeing the decision as worthwhile news. A few local outlets did report on it.

https://www.wgrz.com/article/news/local/nys-thruway-authority-loses-lawsuit-over-nonfunctioning-windmills-judge-dismisses-court-case

Paul Johnson
Reply to  Rud Istvan
August 11, 2022 9:41 pm

LCOE does not address the value of intermittent power, only its cost. A full capacity “standby” system still has to be built, operated and maintained. The value of intermittent power is only the avoided cost of fuel for the reliable systems.
An estimate of Levelized Electricity System Cost (LESC) would pair an intermittent with a reliable back-up source. Capital, operating and maintenance for both systems would be included. Fuel costs for the reliable system would be reduced by the expected 30%-40% delivered capacity of the intermittent system less an allowance for spinning reserve.

Reply to  Paul Johnson
August 12, 2022 6:07 am

I have often thought that the true path forward is to only pay full price to dispatchable generators. If wind and solar want the full price paid then they have to cover the standby costs themselves. Even that does not incorporate the ancillary services costs.

chadb
Reply to  Paul Johnson
August 12, 2022 8:19 am

It doesn’t have to be built, operated, and maintained. It already exists and will be maintained. It is like imagining you own a car for grocery trip, but then calculate your cost savings for riding a bike. “But you still have to pay for the car for days when it’s snowing!” No, you are going to pay for it anyhow – that cost does not get passed onto the bike. You purchase the bike (cost) and buy less gas (save fuel), that’s it. It’s the same when a solar panel reduces the load on a gas turbine that is already in the ground. You don’t magically burden the solar panel with the capital cost of a turbine that is going to be maintained anyway.

MarkW
Reply to  chadb
August 12, 2022 8:57 am

You admit that the maintenance and other costs of the fossil fuel plant are there, then you admit that wind and solar are going reduce the amount of energy that these fossil fuel plants can sell.

However you refuse to tie those two points together.
That being since the same costs are distributed over less output, the price for that output must necessarily rise.

You also completely ignore the fact that constantly ramping the output of fossil fuel plants up and down in order to make up for the unpredictable and unreliable nature of wind and solar, increases wear and tear of fossil fuel plants making the cost of operating them go up even further.

chadb
Reply to  MarkW
August 12, 2022 10:34 am

You admit that the maintenance and other costs of the fossil fuel plant are there, then you admit that wind and solar are going reduce the amount of energy that these fossil fuel plants can sell.

Yes I admit that, it should be pretty obvious.
However you refuse to tie those two points together.

That being since the same costs are distributed over less output, the price for that output must necessarily rise.

Let’s play a different game. Let’s say I own a combined cycle gas plant. Let’s imagine I have the opportunity to lease land on a farm and install a wind turbine. Given that I personally own the gas plant and I personally sell electricity, why would I install a wind turbine? I would install the wind turbine if the money I by not purchasing natural gas when the wind is blowing is more than I would spend on the wind turbine. Let’s stop imagining wind and natural gas as competing against eachother. Power operators own both systems. If they already own the nat gas plant they would account for all costs (including sunk capital) when deciding whether to build wind farms. Yet Duke Energy (and others) who own gas turbines are building wind farms. You have to wonder why their army of accountants, investors, and the investors lawyers have missed what is so painfully obvious to you.
Maybe your math is wrong?

Reply to  chadb
August 12, 2022 11:27 am

Generating companies develop new resources when they think they can make money. Companies who own fossil-fired generators and build wind farms like Duke Energy have decided to reduce profitability risk by taking the subsidy-laden renewable option. Besides they can claim green credentials and appease their woke stakeholders when they build renewables.

The point I tried to make and most of the commenters are making is that when you have an electric system that has a large proportion of intermittent wind and solar somebody has to pay for the resources necessary to address intermittency. Wind and solar generators are also inverter-based resources that do not provide the ancillary services necessary to maintain the transmission system. Again somebody has to pay for that resource.  

The LCOE accounting framework ignores all these issues and that enables advocates to claim a future electric system based on wind and solar will be cheaper.  That simply will not be the case.

MarkW
Reply to  chadb
August 12, 2022 6:29 pm

Nothing wrong with my math, what’s wrong is your physics.
As I stated before, you don’t save any natural gas when the wind is blowing. Because wind can cut out at any time, you have to keep the natural gas plant running all of the time.

The fact that power companies are subsidy mining is not evidence that wind is the future, it’s just more evidence that the subsidies are too high.

auto
Reply to  Rud Istvan
August 12, 2022 12:57 pm

Rud,
Surely if the current Resident of the US makes an Executive Order that it is so, then Wind will be naturally cheaper than any combination of Fossil Fuel generation.
Surely a simple task for such a wonderful man.
He’ll probably make pi equal three, too.

Auto

Tom Halla
August 11, 2022 2:46 pm

The other consideration wind causes is investment misallocation. Given production tax credits and other subsidies, wind looks more attractive than conventional sources. As the subsidy miners are not penalized for the intermittent nature of wind, it tends to reduce investment in dispatchable supplies.

Rud Istvan
Reply to  Tom Halla
August 11, 2022 3:02 pm

Yes. Wind is subsidized and not forced to cover intermittency backup costs. So it’s penetration grows thanks to subsidy miners. The conventional generators are forced to cover grid intermittency for ‘free’. But in reality it is a big cost because their dispatchable generating equipment becomes underutilized. They have the fixed cost, but not the full covering revenue ‘stolen’ by wind. So of course dispatchable investment is reduced. The higher the wind penetration, the worse the problem. See the extremis grid distress UK and Germany now have.

Jim Gorman
Reply to  Rud Istvan
August 12, 2022 4:14 am

Sooner or later it will cause the closing of these plants. If the investment and operating costs can not be recovered, no one will continue to operate them. State Public Utility Commissions can force them to stay open only if they allow them to recover the lost revenue. Either way the cost of electricity will rise. Economics will prevail and I hope someone, somehow is held accountable for the stupid decisions they have made.

Eisenhower
Reply to  Jim Gorman
August 12, 2022 1:24 pm

That is exactly the plan. And it’s been happening in CA for some time. The past 2 years Gov Newsom has had to force plants that were closing for economic reasons to stay open and producing.

IAMPCBOB
Reply to  Eisenhower
August 15, 2022 11:52 am

Yes, we see the problem there, but after all, SOMEONE had to vote for him and his ‘solutions’! Did you?

IAMPCBOB
Reply to  Jim Gorman
August 15, 2022 11:51 am

No, only the taxpayers and energy customers will will be accountable, through ever HIGHER rates! Governments see that as a proper resolution to ‘the problem’!

Donald Hertzmark
Reply to  Tom Halla
August 11, 2022 4:55 pm

Agree that there is zero evidence that wind and solar can reduce electricity costs. Everywhere the PTB try to implement this advanced thinking, costs rise and grid reliability declines.

In addition to the problems caused by distortions in tax and pricing policies, the priority dispatch accorded renewables allows them to step in front of baseload generation in the merit order when wind is available, thereby reducing the financial viability of baseload plants without any corresponding contribution to firm capacity. There is no reduction in emissions either (or at least not much when one looks at PJM data) when a generator has to keep burning fuel and boiling water in order to be dispatched in the next hour, after having been displaced by wind in this hour.

As a (retired) modeler and planner I can attest to the author’s skepticism about models like RFF’s “Haiku.” Indeed, whenever I have tried to fairly account for wind and solar in national or regional market models, the shadowing/mirroring costs necessary to achieve an acceptable level of reliability almost always result in higher total system costs to meet a given demand. Volatility of costs is usually below that of fuel-based systems and like any price stabilization policy, it comes with a definite cost.

IAMPCBOB
Reply to  Donald Hertzmark
August 15, 2022 11:57 am

Agree that there is zero evidence that wind and solar can reduce electricity costs. Everywhere the PTB try to implement this advanced thinking, costs rise and grid reliability declines.”

I’m hoping that people will wake up and see the extent of the lies, but it won’t happen until untold $Trillions are spent on retrofitting homes and factories, trying to reduce the cost of energy using a technology that has NO hope of ever being successful! All it will succeed in is killing the goose that laid the golden eggs (fossil fuels) and leaving EVERYONE out in the cold! Literally! But, isn’t that the master plan, after all?

Chris Hanley
August 11, 2022 3:19 pm

Models be damned the empirical evidence is overwhelming: the more wind and solar the higher the cost:
comment image
Anyone out there who can cite one country where the wind and solar have replaced fossil fuels and reduced the retail cost of electricity? Nick Stokes?

Jeff L
Reply to  Chris Hanley
August 11, 2022 6:05 pm

This graph says it all .. even more than the Texas plot, which are not inconsistent with each other.

Our collective problem : we actually look at & analyze data…. the other side … completely unconstrained by data. Hard to argue with anyone who isn’t constrained by facts and data.

How many people have you met who are absolutely convinced CAGW is going to do us all in but couldn’t quote a single fact or data point on the subject ?

Not sure how to combat that but it is at the core of the real problem (which is people believing CAGW is an existential threat).

Clyde Spencer
Reply to  Jeff L
August 12, 2022 9:12 am

Perhaps a step in the right direction would be to fine news outlets for articles that lie — either by out-right commission or omission. However, because most carry water for democrats, it would be impossible to get such legislation passed unless the mid-terms start the process of replacing democrats.

MarkW
Reply to  Clyde Spencer
August 12, 2022 6:33 pm

Unfortunately, that sounds too much like the Truth Commission that Biden tried to set up earlier this year. Having government decide what is true and what isn’t, is never a good idea.

chadb
Reply to  Chris Hanley
August 12, 2022 8:20 am

Where does Texas fall on that chart?

Leslie MacMillan
Reply to  Chris Hanley
August 12, 2022 9:07 pm

In general, the poorer countries have lower electricity rates than the wealthier ones, France and Portugal being two outliers that should be reversed if my observation was to be water tight. The graph doesn’t quote an r^2 but to my eyeballing per capita income explains as much as the variance in electricity costs as solar + wind penetration does. Why should this be? Higher wages and rents and more onerous regulations lead to higher rates?

As countries get wealthier they become more willing to give up cheap coal in favour of more expensive generation to secure the benefit of less traditional ground-level air pollution (smog, acid rain). In Europe (other than France which has both hydro and nuclear) this will be wind and solar, with gas less prominent than in, say, Indiana. So the relation between weather-dependent generation and costs is confounded with greater per-capita income. If Europe had indigenous gas (even before the war) you might still see rising electricity rates even without any wind/solar at all, just from the shift away from brown coal. Of course if they’d frack their frackin’ gas they might enjoy lower costs!

The other striking fact is that electricity is expensive everywhere in Europe, even in poor countries where paying for it must be a real burden. Residential electricity in Ontario costs me 9.8 Canadian cents/kW-h for the first 600 kW-hr in summer, = 7.5 euro-cents. We burn no coal at all, 8% wind. Local distribution is on top of that; I don’t know if the European rates include it. We also export electricity to New York, Michigan, and Manitoba almost every day, and to Quebec in winter for their electric baseboard heaters.

The Texas data are more convincing because they show rising rates over time in the same jurisdiction as weather-dependent generators proliferate. But wind enthusiasts could argue (without evidence) that rates would have risen even more had Texas not gone for wind. You’d have to compare states that resisted wind to see what happened to their rates. Ontario may not be that comparison. Our rates went up after we closed our coal plants even without a big shift to wind. On the other hand, even though wind generates only 8%, it does account for 13% of our installed capacity, so there was considerable capital invested in both windmills and gas turbines…and the government electricity generator and distributor was restructured to deal with runaway debt, so who knows what our real costs are?

But I agree with the Mr Caiazza’s main premise that it is not credible to expect that weather-dependent generators will bring *down* the cost of electricity just because the fuel is free.

Last edited 1 month ago by Leslie MacMillan
Simonsays
August 11, 2022 3:20 pm

Can someone explain how a red state like Texas known for its oil, got so sucked into the renewable energy.

Retired_Engineer_Jim
Reply to  Simonsays
August 11, 2022 3:23 pm

The number of folks who moved from California (the Bay Area) to Austin.

Clyde Spencer
Reply to  Retired_Engineer_Jim
August 12, 2022 9:22 am

Are you suggesting that the early immigrants to Austin were a wave of acolytes spreading the liberal ideology of the Bay Area? Here all along I thought that those leaving California were leaving in disgust over the overcrowding and liberal legislature.

I had lived in the Bay Area from 1957 (when there were still orchards between the little burgs of Santa Clara, Sunnyvale, and Mountain View) until 1995. I didn’t go back when I retired because I was unwilling to deal with the changes foisted on the population by liberals. Not everyone who left California is Blue.

Last edited 1 month ago by Clyde Spencer
Joe Crawford
Reply to  Clyde Spencer
August 12, 2022 11:54 am

I moved out of Colorado around 1992 after living there for 20 years. It was already becoming Californicated to the point where I knew I wouldn’t be able to afford to retire there. However, the increased real estate prices allowed me to sell the cabin, buy a 44′ sailboat and spend 7 years in the NW Caribbean before coming back to do a bit of consulting before retirement.

IAMPCBOB
Reply to  Retired_Engineer_Jim
August 15, 2022 12:03 pm

Yes, the number of NON-thinking folks! Anyone else, who can actually THINK, can see that solar and wind are both unacceptable. as for Texas,itself, where I grew up, they have always had PLENTY of electricity, BEFORE solar and wind came along. The oil is STILL there, but people like Mr. Biden won’t allow it to be used! Fancy that!

Rud Istvan
Reply to  Simonsays
August 11, 2022 3:33 pm

Subsidy farming can be quite profitable. And then there is bright blue Austin.

Kit P
Reply to  Simonsays
August 11, 2022 5:08 pm

Actually I do know. Texas Governor Bush needed to get new coal and gas power plants built to meet demand after deregulation. In a compromise with enviromentalist, a modest RPS for wind was established.

Texas got the power plants built and did not hbave rolling blackouts.

My company built some of the plants and was able to get a CCGT plant on line in Texas and other states in less than a year.

Califonia has a similiar problem and failed to solve without rolling blackouts. In one case, it took my company 3 years to get a permit.

POTUS Bush established lots of things when he signed the 2005 Energy Bill. A very well crafted piece of legislation.

I can not say that about this bill because I have not read it. I am retired.

John Hultquist
Reply to  Simonsays
August 11, 2022 5:38 pm

Start by following the trail of T. Boone Pickens, Mesa Water, and a huge order for wind turbines that ran into issues.
Here is a start, you do the rest:
 https://en.wikipedia.org/wiki/Pickens_Plan

ATheoK
Reply to  Simonsays
August 11, 2022 9:34 pm

T. Boone Pickens decided wind energy was a huge future market. He sunk a huge fortune into wind farms and then cajoled, wrangled, pestered government officials into ‘deals’ for wind energy.

mkelly
Reply to  Simonsays
August 12, 2022 6:01 am

T. Boone Pickens is to blame for all the problems on Texas. Years ago he would be on CNBC hawking how much wind Texas had and how Texas should build wind farms. Odd for an oil man but subsidies can suck I need anyone, I guess.

Kit P
August 11, 2022 3:41 pm

Roger C did not get it right, Rud and Tom also.

Predicting the future cost of producing electricty with gas is difficult if not imposible.

I have been right about that for 30 years.

The mistake we make in the US is trading low short term production cost for long term stanlity.

Coal and nuclear have higher capital cost but very stable fuel cost.

So the mistake was over building CCGT. Based on that mistake, wind could mitigate natural gas prices.

On a personal level, I have both covered. I have invested in both subsidy miners and coal miners.

Reply to  Kit P
August 11, 2022 4:01 pm

“Predicting the future cost of producing electricty with gas is difficult if not imposible.”

Predicting ANYTHING is nearly impossible.
Especially the climate in 100 years.

Pat from kerbob
Reply to  Richard Greene
August 11, 2022 4:58 pm

“Predictions are difficult, especially about the future”.

IAMPCBOB
Reply to  Pat from kerbob
August 15, 2022 12:09 pm

HA HA! yeah, I read that somewhere, too. But, it’s TRUE,though!

Kit P
Reply to  Richard Greene
August 11, 2022 5:12 pm

Predicting the climate is easy. It will be the same as it has been for the last 3 million years.

IAMPCBOB
Reply to  Richard Greene
August 15, 2022 12:08 pm

Or even much more than 10 years!

Reply to  Kit P
August 11, 2022 5:12 pm

I agree that over-reliance on natural gas for electric generation is a poor choice because natural gas has too much value to be used over coal and nuclear which as you say have stable fuel costs.

August 11, 2022 3:47 pm

I’m the editor of a climate science and energy blog that has had over 330,000 page views. I present articles by other authors that I’ve read online every day. My skill is determining which authors know what they are talking about, support their conclusions with facts and data, and communicate well.

My job is made easier by a minority of authors who ALWAYS be trusted.

One of those authors is Roger Caiazza
(link to his blog below)

Although Calazza’s blog is about New York State, and I was interested mainly because I spent the first 23 years of my life in New York state, the lessons learned will apply to other states being ruined by leftists.

Pragmatic Environmentalist of New York – Balancing the risks and benefits of environmental initiatives

Last edited 1 month ago by Richard Greene
Reply to  Richard Greene
August 11, 2022 4:52 pm

Thank you very much for the compliment!

Kit P
Reply to  Richard Greene
August 11, 2022 6:03 pm

Being editor of a blog makes Mr Green an Idiot.

Furthermore I discern that Mr Green has no skill to determine what authors are right.

When it came to techical writing, I was never wrong. There were criminal penalties for that. If I signed it, it was true. I know this because of the review porcess.

For example, I once made a statement that a new material was insoulabe. The NRC replied that our test results for trying to disolve things showed 50 ppm.

Replying to goverment regulators with sarcasm is not helpful. There job is to show they did a good review by asking questions. My answer was tht 50 ppm indicated that it was not soluable.

The absence of evidence is not necessarily evidence. There was no problem with the old material for 100 years of use in a steam plant until there was a problem.

So if you have an anti-nuke aggenda, you say ‘I told you so!’.

At WUWT lots of people have an aggenda and it not getting sciece right.

It is simple. Electricty produced from other souirces will mitigate the cost of natural gas on the world market.

Reply to  Kit P
August 12, 2022 1:21 am

There are no facts, data or details to support your first two insults.
They are childish, generic character attacks that would make your Mother ashamed of you. They also stop readers from taking you seriously after the first two sentences.

The rest of your pontificating is not related to the first two sentences.
That demonstrates poor writing skills.

Your angry, incoherent and disjointed comment is rejected for all three of my blogs. However, I have referred your comment to a local mental hospital. They will be calling you to request that you get your head examined. I am optimistic, however, that they will find nothing.

Clyde Spencer
Reply to  Richard Greene
August 12, 2022 9:29 am

The pot calling the kettle black.

Reply to  Clyde Spencer
August 12, 2022 1:11 pm

I hope you did not strain your brain coming up with that insult

Jim Gorman
Reply to  Kit P
August 12, 2022 4:21 am

You ignore that supply and demand for gas is deformed by government control of supply. Disallow drilling and guess what, gas costs more. Disallow coal mining and guess what, coal costs more. If the free market was to work properly, you could forecast the costs pretty reliably. With government interference, nobody can.

ihfan
Reply to  Kit P
August 12, 2022 9:48 am

Being editor of a blog makes Mr Green an Idiot.

Replying to blog posts must make you feel even more like an idiot.

Bob
August 11, 2022 3:48 pm

I am so sick and tired of the endless lies and double talk coming from my government, at some point these miserable bottom feeders need to be held accountable.

Reply to  Bob
August 11, 2022 4:05 pm

You must be ready for life support with Jumpin’ Joe Biden and Kamala “word salad” Harris

IAMPCBOB
Reply to  Bob
August 15, 2022 12:15 pm

Held accountable by WHOM? The voters? That’s the only real hope for that, but with all of the election fraud and DENIALS of election fraud, that will never happen, sad to say!

2% Milk
August 11, 2022 3:54 pm

A more interesting final graph would be inflation adjusted and have average electric costs delta for the bottom 10 states for renewables. Maybe The Texas increase is half of what they might have been, maybe they are twice as much as the do nothing option. Can’t tell with data presented.

Reply to  2% Milk
August 11, 2022 4:08 pm

the annual inflation rate in the United States has increased from 3.2 percent in 2011 to 4.7 percent in 2021. 

The higher rates of consumer price inflation began in October 2021

United States Inflation Rate MoM – July 2022 Data – 1950-2021 Historical (tradingeconomics.com)

Clyde Spencer
Reply to  Richard Greene
August 12, 2022 9:32 am

… increased from 3.2 percent in 2011 to 4.7 percent in 2021.

The graph starts in 2001, not 2011.

Reply to  Clyde Spencer
August 12, 2022 1:09 pm

2.85% in 2001
I need new reading glasses

Reply to  2% Milk
August 11, 2022 4:53 pm

There are links to the data in the post. Your ideas sound good but I don’t have time.

chadb
Reply to  2% Milk
August 12, 2022 8:26 am

Compare his chart to this one for residential prices for the US
EIA Chart
Notice they follow the same general trend. That is, the wind boom in Texas did not make Texas any different from the US as a whole.

Reply to  chadb
August 12, 2022 11:30 am

The point is that the advocates believe it should be different because renewables are cheaper.

CD in Wisconsin
August 11, 2022 4:24 pm

According to the report the Inflation Reduction Act (IRA) legislation, will “save typical American households up to $220 per year over the next decade and substantially reduce electricity price volatility.”  

*************

“War is Peace
Freedom is Slavery
Ignorance is Strength”
—- George Orwell Nineteen Eighty-Four

Big Brother lives.

meiggs
Reply to  CD in Wisconsin
August 11, 2022 4:50 pm

Big sister?

Redge
Reply to  meiggs
August 11, 2022 11:21 pm

Big non-binary-gender-fluid-neutral-polygender-trans-?

observa
Reply to  CD in Wisconsin
August 12, 2022 2:13 am

Australians were promised $275 reductions in our power bills by incoming Federal Labor so do we win with the nominal promises?

IAMPCBOB
Reply to  CD in Wisconsin
August 15, 2022 12:18 pm

Remember, according to the liberals, words only mean what THEY say they mean. Never mind what dictionaries say!

Larry Hamlin
August 11, 2022 4:39 pm

EIA electricity rate data shows that in the period from 2000 through 2020 California average electricity costs have climbed more than 4.5 times higher than Texas, more than 2.7 times higher than Florida and more than 2.25 times higher than the average for the U.S.
The claims of reduced electricity costs because of greater mandates to use renewables are just plain garbage.

Drake
Reply to  Larry Hamlin
August 11, 2022 6:37 pm

I think you missed the massive transfer of wealth from the rate payers to the government and trial lawyers over the wildfires caused by sparks from transmission lines.

Liberals in Cali have many ways to raise prices for consumers.

chadb
Reply to  Larry Hamlin
August 12, 2022 8:27 am

How about in Pennsylvania where almost no renewables went in? Did they keep their same price structure?

Mike Smith
August 11, 2022 6:37 pm

According to my highly reliable sources, the cost of electricity will fall even faster than projected by the Haiku Electricity Market Model.

The tooth fairy told me so.

Philip CM
August 11, 2022 6:40 pm

Prior to any effective reduction in costs of renewables, we must first do away with all and any subsidies to the production, site prep and construction, operations costs, and delivery of renewables. Then we can discuss how a $370Billion taxpayer funded Federal Bill will reduce homeowner rates.

Mike Smith
August 11, 2022 6:50 pm

I live in California (Bay Area) and in late 2015 I paid:

Tier 1: $0.16700/kWh
Tier 2: $0.19824/kWh

In July 2020 I paid:

Off Peak: $0.33931
Peak: $0.47427

I fully expect (and warn my friends and neighbors) that we will soon be paying $1.00/kWh or more.

Independent
Reply to  Mike Smith
August 11, 2022 7:12 pm

Remember, electricity prices will “necessarily skyrocket” per Barack Obama (the former worst president in U.S. history), and now his even less intelligent VP has been illegitimately installed into the White House…

IAMPCBOB
Reply to  Independent
August 15, 2022 12:21 pm

To do just what his mentor promised us we would have! Ain’t politics grand?

IAMPCBOB
Reply to  Mike Smith
August 15, 2022 12:23 pm

At that point, maybe buying a gasoline or NG generator wouldn’t be such a far fetched solution after all. But, then Newsom is bound to OUTLAW them!

Joe Gordon
August 11, 2022 7:26 pm

Is this what they mean by Haiku modeling?

Ignore backup need,
Subsidies added to debt,
Renew Forever!

lee
August 11, 2022 7:30 pm

“RFF analyzed the effects on the crucial electricity sector using their in-house Haiku Electricity Market Model to “project electricity retail rates for a range of potential scenarios that account for variability in future fuel prices, capital and technology costs, and uptake of specific provisions of the legislation. The analysis found that if the legislation is passed:”

Now all they need to do is make it into a Haiku.;)

August 12, 2022 3:09 am

My latest nontechnical educational piece from Range Magazine:
Reliable wind and solar are not cheap
By David Wojick
https://www.cfact.org/2022/08/11/reliable-wind-and-solar-are-not-cheap/

The beginning: “You often hear that wind and solar power are cheaper than burning coal or natural gas, so we will save money by switching. But as the song says, it ain’t necessarily so. In fact it is almost never so. That wind and solar are cheaper is at best a half truth, more like an eighth truth.

Here is the reality you never hear of. That wind and solar are cheaper is true in one way, but it is a small way. It is also a technical way, with the grand name of the “levelized cost of electricity” or LCOE. Now “levelized” is not a word you hear every day, to say the least. This might tip you off that something is going on.”

The middle: “However, when used in the grid to power America, wind and solar are far from cheaper. This is the fact that proponents of wind and solar like to ignore, or in many cases do not even know about. In addition to the LCOE there is the high cost of making wind and solar reliable.

The basic fact is that coal and gas are reliable while wind and solar are not. What this means is that with coal and gas we can generate the electricity when we need it. We can rely on it. Wind and solar only generate when the wind blows strong and the sun shines bright. Since we cannot rely on wind and solar we have to have gas or coal generators standing by, ready to run when wind or solar don’t.

Having gas or coal fired power plants standing by is a big cost that is not included in LCOE. These generators could be supplying the power instead of the wind and solar, which would pay for them, but they are not. They are sitting there waiting to run, which still costs a lot of money. The big cost of these idle plants is part of the cost of wind and solar. It is the cost of reliability.”

Lots more in the article. Please share it.

observa
Reply to  David Wojick
August 12, 2022 4:23 am

It’s definitely not so as consumers have to pay the total reliable price-
UK energy bills ‘set to cost two month’s wages’, ministers warned (msn.com)
Unless they want greenouts of course.

Dave Andrews
Reply to  observa
August 12, 2022 9:24 am

And that “total reliable price” has been increasing even though total demand for electricity in the UK keeps going down.

Since 2000 industrial demand has fallen by 20% but capacity has had to rise by over 20GW to meet this significantly lower total demand because of the greater penetration of unreliables. This makes all providers of electricity intermittent and pushes up their costs.

Now we are looking at a further 40GW of offshore wind which will increase the price of electricity even more!

chadb
Reply to  David Wojick
August 12, 2022 8:39 am

My models don’t minimize on LCOE, they minimize on system cost which includes all back-up, fuel, and operating costs. Effectively they ask “what is the lowest total bill, I don’t care how you get there, just get there.” Those models estimate ERCOT at ~75% decarbonization without any new incentives (that includes nuclear and wind/solar).
To be fair, Pennsylvania doesn’t decarbonize much, neither does Florida. However, the Western Interconnect gets near 75% renewables as well (but that assumes transmission lines linking Wyoming to California).
Modeling on “total bill” accounts for all the hidden costs. You sum up all capital, operating, fuel, and other costs then minimize that. In that case you still add wind/solar in Texas. A lot of it. Seriously, a lot.

IAMPCBOB
Reply to  David Wojick
August 15, 2022 12:34 pm

I don’t see anything in any of this about nuclear power. I’m sure, that on a megawatt to megawatt basis, nuclear is at least comparable, if not superior to such pie-in-the-sky ideas as solar and wind power. Nothing is more reliable! The upfront cost is high, but the known life span is MUCH longer! There is NO carbon released, once in place, and temperatures are not a worry. New technology is being developed, now, to make them smaller, lighter and and cheaper, such as nuclear micro reactors, that can be moved by trucks, trains or aircraft. As they used to say, necessity is the mother of invention. Engineers are famous for finding solutions to problems! That’s what they do! (I retired as one)

rah
August 12, 2022 5:44 am

They can lie all they want, but we are the ones paying the damned bills!

Coach Springer
August 12, 2022 6:40 am

Yes, well, Illinois experience reveals that deployment of renewable energy increases costs. There are new wind fields every 25 miles for 125 miles around me. My levelized billing is more than double what it was a year ago.

chadb
August 12, 2022 8:14 am

The cost of electricity has not been steadily increasing since 2001, there was a pause from 2009-2021 (onset of deregulation to Bidenflation). During this time renewables went from 2-20% of annual generation while prices were almost flat (far below inflation). Did you notice any other areas of your life where prices stayed flat for 12 years? (To be fair, that is the case for electricity in the US as a whole.)
Also, while Texas has the most renewable generation in the US it is still well below the average for the price of electricity. This is even though Texas
1) has to build new infrastructure to manage an expanding grid – most other states can use existing infrastructure
2) has no hydro resources (which keeps states like Washington and Oregon low)
3) is sparsely populated and has more miles of transmission and distribution
ERCOT is this year on track to generate ~30% of electricity from wind and solar. I expect they will hit ~60% from wind and solar by 2030. I also suspect that at that point the wind/solar boom in Texas will end.

ihfan
Reply to  chadb
August 12, 2022 9:54 am

has no hydro resources (which keeps states like Washington and Oregon low)

Environutz in WA and OR are trying their best to get rid of hydro power.

Beta Blocker
August 12, 2022 10:43 am

Here in the US Northwest, considerable pressure is being applied by the region’s politicians to eliminate coal-fired and gas-fired power generation from the region’s energy mix. The current policy is to replace those resources with wind and solar. The great majority of the region’s population, most of whom live in the large urban areas near the coasts, are on board with this policy.

Not one person in a hundred living in the states of Oregon, Washington, Montana, and Idaho understands the threat this policy represents to our region’s power supply. Nor do most realize that the era of cheap and abundant electricity in the Northwest is soon to be over, and that it will be over as a direct consequence of public policy decisions.   

A regional planning organization, the Northwest Power and Conservation Council (NPCC), is charted by law with an advisory role for how to achieve a mix of policy objectives which cover both environmental policy goals and energy planning policy goals. 

The Pacific Northwest Electric Power Planning and Conservation Act directs the Northwest Power and Conservation Council to develop a “regional conservation and electric power plan,” and then to review the power plan not less than every five years. The web page for the 2021 version of the plan is here.

A draft of the 2021 plan was issued for public comment and review in the fall of 2021. After a review and comment period, the final version of the plan was approved in May of 2022.

The final plan includes a Statement of Basis and Purpose which describes how the numerous comments were addressed and resolved. That document contains useful information for those of you interested in how difficult the modeling and forecasting of electricity supply and demand has become in the Era of Renewables.  

Here are excerpts from the Statement of Basis and Purpose summary and introduction:

———————————–

In reviewing, developing and adopting the “regional conservation and electric power plan,” the Northwest Power Act tells the Council to give priority to conservation and generation resources that are “cost-effective,” and it also tells the Council to give priority to resources in the following order: first, to conservation; second to renewable resources; third, to generating resources using waste heat or generating resources of high fuel-conversion efficiency; and fourth, to all other resources.

Per the Act the plan must also set forth a scheme for implementing conservation measures and developing generating resources to meet the obligations of the Bonneville Power Administration (Bonneville), and to do so with due consideration by the Council for (A) environmental quality; (B) compatibility with the existing regional power system; (C) protection, mitigation, and enhancement of fish and wildlife and related spawning grounds and habitat, including sufficient quality and quantity of flows for successful migration, survival, and propagation of anadromous fish; and (D) other criteria that may be set forth in the plan.

The Power Act then requires the plan to include the following elements:

• an energy conservation program, including model conservation standards
• recommendations for research and development
• a methodology for determining quantifiable environmental costs and benefits
• an electricity demand forecast of at least 20 years
• a forecast of power resources estimated by the Council to meet the obligations of the Bonneville Power Administration and the amounts that can be met by resources in each of the priority categories; the power resource forecast shall (i)include regional reliability and reserve requirements; (ii) take into account the effect, if any, of the requirements of the fish and wildlife program on the availability of resources to Bonneville; and (iii) include the approximate amounts of power the Council recommends Bonneville acquire on a long-term basis and may include, to the extent practicable, an estimate of the types of resources to be acquired
• an analysis of electricity reserve and reliability requirements and cost-effective methods of providing reserves designed to insure adequate electric power at the lowest probable cost.

………..

The Council’s work on the 2021 Power Plan came in the middle of an unusual and dramatic transformation in the power system in the northwest and the western US as a whole, driven by policies and economic trends that are pushing out fossil-fueled generation, adding renewable resources with different power system characteristics, and potentially electrifying significant sectors of the economy.

The Council grappled throughout the power plan process with a host of relatively obvious issues arising out of that transformation. The comments on the draft power plan largely echoed the issues already under consideration. This means a summary of and response to key comments on the draft is also a way to illuminate the key issues the Council grappled with throughout the power plan process, in developing the draft power plan, in considering the comments on the draft and in deliberating and deciding on the final 2021 Power Plan.

(End of Excerpts)

———————————–

What is seen in the NPCC’s 2021 planning effort is a different kind of planning animal than what is seen in New York State’s and California’s power planning documents.

New York State’s and California’s power planning documents reflect a number of pie-in-sky planning assumptions. These documents contain next to no acknowledgement of the deep technical and planning uncertainties surrounding a massive transition from coal and natural gas towards wind and solar; plus the additional uncertainties of electrifying significant sectors of the economy.

Extensive modeling is relied upon by each of the three power planning efforts.

But, in contrast with New York State and California, the NPCC’s planning effort acknowledges that large uncertainties are present in the planning assumptions; and that these uncertainties directly impact the outputs being produced by the models — and hence, the planning recommendations being delivered by the Council.

Nevertheless, those many politicians in the Northwest who reflect the preferences of a solid majority of the Northwest’s voting public are determined to move forward with a dramatic transition into a wind and solar powered economy. And to do so in general alignment with the Biden administration’s Net Zero initiatives.

In any case, it remains to be seen if those of us who live and work in the US Northwest will eventually join the ranks of the renewable energy victims who now inhabit New York State and California.

Last edited 1 month ago by Beta Blocker
Reply to  Beta Blocker
August 12, 2022 11:38 am

Very interesting. Thank you for the information. I find it distressing that even when the uncertainties are presented rather than ignored as in New York that the outcome is the same. I have always thought that when the big greenout occurs that the possessed will have to acknowledge the failure of their idealistic approach. Now I am not so sure.

Beta Blocker
Reply to  Roger Caiazza
August 12, 2022 12:45 pm

The NPCC’s 2021 power planning document is moderated somewhat by the presence of Idaho and Montana on the Council. If Oregon and Washington had their way, the document would go Full California Dreaming (FCD).

Regardless of what the 2021 document says or doesn’t say, the Biden administration remains determined to follow through with its regulatory war on fossil fuels, including the forced early shutdown of many of our legacy coal-fired and gas-fired power generation plants.

Unless the Republicans can control both houses of Congress with veto-proof majorities after 2023, nothing can stop Biden’s people from moving forward with their war on carbon. They’ve also said explicitly that they will ignore West Virginia vs EPA and also any other SCOTUS decision adverse to their policy agenda.

Biden’s energy policy will be in place for the next two and a half years.

The near-term question power planners must deal with is how many of those legacy coal-fired and gas-fired plants inside and outside the US Northwest whose output feeds the Western Interconnect will be adversely affected within the next three to five years by the larger national policy.

One way or another, those of us who live in the US Northwest must adapt to having less electricity available and at higher cost. The only question on that score is how much less electricity at how much of a higher cost.

Last edited 1 month ago by Beta Blocker
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