Texas Starts Waking Up To The Issue Of The Full Costs Of “Renewables”
by Francis Menton
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.
Someday, the world will come around to adopting my proposal. Meanwhile, I’m glad to report that Texas has at least woken up to the existence of this issue.
In 2020 climate activist Bill McKibben claimed, “In the last 10 years, engineers have driven the price of sun and wind power down below coal.” But H. Sterling Burnett, an energy policy analyst at the Heartland Institute, explained why McKibben’s claim was not accurate.
“What McKibben doesn’t disclose is that he’s only counting the price of wind and solar on days when they are operating at peak capacity, while ignoring their capital costs,” Burnett wrote. “The fact that wind and solar produce so little of the world’s electricity mix is proof positive that they are substantially more expensive than conventional energy,” Burnett explained.
“McKibben also conveniently fails to count the tremendous subsidies wind and solar power received from the government. Indeed, without government subsidies and mandates, wind and solar power would largely be a boutique power supply for the wealthy,” Burnett explained.