From Manhattan Contrarians
Francis Menton
I’ve posted a lot about the soaring consumer electricity costs being experienced by residents of jurisdictions furthest along the path to all-renewable energy. Consumer electricity prices in places like Germany, the United Kingdom, and California are two to three times the U.S. average. But is this difference the result of their race to switch to wind and solar power, or is it due to “bad luck” or other reasons? Even as electricity prices soar in many places, advocates of wind and solar power still claim these resources are cheaper than hydrocarbon alternatives. Do they have a point?
The latest debate has unfolded on the editorial pages of The Wall Street Journal. On August 20, Republican vice presidential candidate J.D. Vance published an op-ed titled “Harris Wages War on American Energy.” He argued:
“Net-zero emissions projects have already disincentivized investment in coal, natural gas and nuclear power plants, which Americans rely on to provide reliable, affordable 'baseload' electricity.”
On August 28, the Wall Street Journal published a reply from Mark Z. Jacobson. Jacobson, a professor at Stanford University, is perhaps the most prominent advocate of transitioning to fully renewable energy, which he calls “WWS” (wind, water, solar), supplemented by some kind of energy storage. As early as 2011, Jacobson came to prominence by publishing a paper in the Elsevier publication Science Direct, which was subsequently published in the Proceedings of the National Academy of Sciences (PNAS) in 2015. An important paper was published titled “A low-cost solution to the grid reliability problem with 100% intermittent wind penetration.” For example, we published this article in the Guardian in January 2023, key quote: “Renewable energy alone could halt the climate crisis, the influential academic said. . . . He believes that wind, hydro and solar power can provide sufficient and cheap electricity to end the carbon emissions that are driving the climate crisis. If I haven’t already mentioned it, Jacobson was the driving force behind the New York Climate Leadership and Community Protection Act through his aide, Robert Howarth of Cornell University.
Consider Jacobson's August 28 Wall Street Journal letter. This is the core of it:
South Dakota, Montana, Iowa, Kansas, Oklahoma, Wyoming and North Dakota missed the question [of expensive renewable power]. With the exception of Montana, these states are primarily powered by wind energy and are among the 12 states with the highest share of clean, renewable energy generation in their electricity needs. How do the 12 highly renewable states rank on electricity prices? Among them, 10 states are among the 19 states with the lowest electricity prices. Seven of the 10 states with the lowest prices. South Dakota, which meets 95% of its needs with renewable energy, has the ninth-highest electricity prices. North Dakota (52% renewable energy) has the lowest share. More renewable energy means lower prices.
Does it matter? Okay, let's look at a few states at a time.
Jacobson cited South Dakota as his first example. He said renewable energy “supply[] 95% of demand” But the country has “Ninth lowest electricity price.” Can public data support this?
The answer is that South Dakota's public data are wildly inconsistent and contradictory, but no matter how you look at them, they don't support Jacobson's claims. The following is the Department of Energy's Energy Information Administration's page on South Dakota, updated on August 15, 2024.
In 2023, wind power will account for 55% of South Dakota's total electricity generation. Wind power surpassed hydropower, the state's previous dominant electricity source, for the first time in 2021. . . In 2023, renewable energy generation will account for 77% of South Dakota's total electricity, almost all from wind power and hydropower.
So, according to this statement, “renewable energy” provides 77% of SD's electricity generation, not 95% as Jacobson claims; of that 77%, 21% comes from hydroelectric power from Missouri River dams. Sorry if you don't have the Missouri River running through your state to replicate this. Wind power generation is only 55%. Yes, that's better than Hierro's performance in most years, but it's still a long way from zero-emission power generation.
Now let's look at the very different 2023 data from the South Dakota Public Utilities Commission. These figures are for electricity “consumed” by South Dakota, not electricity “generated” by South Dakota, which may or may not explain the huge difference. Here is a pie chart of the PUC:
Suddenly, coal is by far the largest source, accounting for 36.13%, which is more than “renewable energy” wind, solar and hydro combined (32.35%). Perhaps in times of excess generation, when SD is unavailable, all remaining wind power will be given away to neighboring countries. I can't figure this out.
Now, where did our friend Jacobson come up with his statistics on South Dakota's supply? “95% of [electricity] demand]from renewable energy”? I have no idea. He is likely relying on the principle that the left and climate activists do not accept fact-checking.
Anyway, here is the EIA's chart of “Average Electricity Prices for Utility Customers” for June 2024 (the most recent month available). These states are ranked in no particular order, but if I count correctly, South Dakota ranks 16th among the states for residential electricity rates and 22nd among “all industries.” Not bad, but far from what Jacobson calls “ninth lowest.”
Are we going to try another state? Next on Jacobson’s list is Montana State. Jacobson admits Montana is not “Primarily driven by wind,” But then he said it was “It is one of the 12 states with the highest proportion of clean and renewable energy generation in electricity demand. Look closely and you'll see that Montana's secret is the dams on the Missouri River. The EIA (the “renewable energy” cheerleading team, but they don’t tell you which one they’re talking about) has this to say:
In 2023, Montana ranks among the top 10 states with the largest proportion of renewable energy generation, about 50%. In 2023, coal-fired power plants will account for the largest share of electricity generation in Montana, accounting for 45% of the state's electricity generation.
But how much of that 50 percent “renewable energy” is hydropower from Missouri River dams, how much is wind energy, and how much is other energy sources? The best source I can find is this report from the Montana Legislature, dated 2023, but the data only goes through 2021. From coal, another 40% comes from hydropower, and about 10% comes from wind energy. There are a large number of unspecified “other” categories.
Likewise, in EIA's June 2024 chart, Montana's residential electricity prices appear to rank 12th among states and 11th among “all industries.”
So Jacobson's first two examples don't fully support his point. Looking at the other states he cited, I think the one that most supports his point is Iowa. So let's look there.
For better or worse, Iowa is further along than any other state in building wind turbines to provide electricity. Wind turbines will generate 62% of Iowa's electricity by 2022, the highest share of any state, according to the EIA. Looking at another EIA page here, Iowa purchased 54,203,955 MWh of electricity in 2022, which means the average demand was 6188 MW (divided by 8760). The Iowa Public Utilities Commission tells us the generation resources Iowa has deployed to meet this demand: 12,543 MW of wind, 5543 MW of coal, 4148 MW of natural gas, 5253 MW of oil and a small amount of other resource. This tells us that Iowa has sufficient generation resources to meet demand before it starts building any wind turbines. Compared to average demand, overbuilds of wind turbines alone are more than double, and if all is included, overbuilds are more than four times higher. Clearly, Iowa has significant generation resources that sit idle most of the time. And, whatever the average interest rates are, if they stop supporting large amounts of idle capital, they will likely be much lower.
So where do Iowa’s rates rank nationally? According to the same EIA chart, residential rates ranked 22nd and “all industries” ranked 10th.
Two comments:
(1) With wind turbine capacity overbuilt by a factor of 2, and 62% of electricity generation coming from wind, Iowa has reached the limit of what can be achieved by building more wind turbines. So far, it's just getting into energy storage. Looking ahead, it will soon become apparent that more wind turbines will only slightly increase the percentage of electricity generated from wind, while buying batteries is completely uneconomical and not a viable solution.
(2) Wind power prices are heavily distorted by the substantial tax incentives and subsidies available to wind turbine developers. First, there is the federal investment tax credit (30% of the capital value of the wind turbine investment) and the federal production tax credit (2.75 cents per kilowatt hour generated). Iowa will then eliminate property taxes completely for five years. There are several federally guaranteed loan programs that offer subsidized interest rates. Departments such as the Department of Agriculture and the Rural Electrification Administration offer a variety of handouts.
Now, how much are all these subsidies and handouts worth in consumer electricity prices? Everything is completely opaque. There is no way for an informed citizen to figure it out. Subsidies could easily be 5 cents per kilowatt hour, and perhaps closer to 10 or even 15 cents per kilowatt hour. Add in the value of the subsidy, and Iowa’s electricity prices would not be in the lower rankings, but far near the top.
So when Jacobson suggested building wind turbines to lower electricity prices, he wasn't saying they were economically cheaper; He just said there are enough subsidies to lower consumer prices Appear Cheaper. He is using gkam accounting.
Either way, we'll see if Iowa and its wind power enthusiasts can continue to move toward a 100% zero-emissions future. If they succeed, I will be the first to congratulate them. But let’s face it – they can’t. When they start adding storage space, their prices skyrocket.
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