Will You See A Reduction In Utility Rates With Renewable Energy?ByRaymond D. Matkowsky
Wind Power
Will renewable energy be a financial windfall for the average consumer? The United States Energy Information Administration (EIA) published a long term power plant projections in March 2020. It projected that energy generation would increase by approximately 55% by 2022 and that wind power increase by 15%. Natural gas generation was expected to decrease to somewhere between 15 to 20% of total generation. None of these projections were accurate.
The EIA now says that 25% of electricity comes from natural gas generation and 46% in 2035. Wind power just crossed the 10% milestone this year. A number of wind power projects are being sidelined as “unviable.†One project in Germany is being converted to a coal mine. This is especially significant since in the past Germany has encouraged Europe to go to only renewable energy and to abandon nuclear plants.
There is a further and unexpected problem with wind turbines. Rapid innovation, manufacturing strains and supply chain issues make wind power increases unlikely in the near future. Turbine failures are increasing all across the world for mysterious reasons. Taller wind turbines (750 ft. or more) have a higher failure than smaller ones. However, smaller turbines have also been failing. The theory is that taller turbines will generate more power.
Furthermore, a portion of discarded turbine blades are being ground and recycled as filler for concrete products, however, most are going into a landfill. This is not an environment friendly outcome. It is only reducing one problem and increasing another.
In 2022 the Biden administration pledged to reach the goal of 30 gigawatts of off shore wind capacity by 2030. Besides the fact that this is a ludicrously short time frame, the British experience should have been a warning of the disaster waiting.
The United Kingdom (UK) has 15 gigawatts of wind turbines presently. The UK has the highest electricity rates since the 1920s. Part of the problem is the war in the Ukraine, but much of it is because of unanticipated costs associated with wind power.
Siemens Energy stock has plunged 37% when it became known that it will cost about US$1.08 billion to repair the flaws in their turbines. Siemens and The UK experience does not bode well for Biden’s goals.
Solar Panels
Solar panels cost between $3500 to $35,000 each. One panel produces 0.17 to 0.35 kw per day. The life time of a panel is 25 years and it is expected to pay for itself in 12 years. The average United States homeowner only resides in his or her residence for five years. They will never have a chance to see any payback in their electric bills unless they continue to reside in the same service area.
There are 133,893,727 electricity customers in the United States. They use 914 kilowatt-hours per month. At an average price of $0.1287 per kilowatt-hour. The number of panels required to generate even half of this usage is huge and would consume a vast amount of land. There have been many projects throughout all industries that have failed because of the lack of land availability. Electricity generation will be no exception.
The EIA in their 2020 report projected solar power usage to be slightly greater than wind power. In 2022, electricity generated by solar energy was only 2.8% in the United States. The EIA projected approximately 18%.
As mentioned previously, the UK has had problems with wind power. The problems however do not seem to be confined to wind mills. Solar panels are not producing the amount of energy anticipated and had to be supplanted by coal fired generation.
It seems that the UK is undergoing a heat wave. High temperatures above 77 F (25 C) reduce the efficiency of solar panels. British temperatures exceeded 86 F (30 C) during several periods. At those temperatures solar panels could be as much as 25% less efficient.
Some of the hottest place on earth use coal fired pants to generate the majority of their electricity. Solar panels would be a very inefficient way of generating electricity in spite of the fact that they have more hours of sunlight. Installing panels in some place would be an environmental disaster.
Generating Costs
The costs associated with power generation can be broken down to two groups, fixed costs and operating costs. Fix costs are essentially capital costs, land and non-variable costs such as utilities. Examples of operating costs are fuel, labor, and maintenance. Fuel costs dominate operating cost but they do not determine the total cost of operating. Nor do they dwarf fixed costs or other barriers to entering the industry.
The capital costs for the various generating technologies (in U.S. dollars per kilowatt) is as follows:
Natural Gas - $600 to $1,200
Wind Turbine - $1,200 to $5,000
Solar - $4,500 and up
These are the major costs, but there are other costs that vary tremendously depending on location, regulatory requirements, the availability and cost of labor, etc. Capital costs can be as complex of a calculation as operating costs.
Actually, operating costs can be much more simplistic than fixed costs. The range of costs, for a kilowatt-hour, of operating a power plant is as follows:
Natural Gas - $0.04 to $0.10
Wind Turbine - Less than $0.01
Solar - Less than $0.01
As you can see the cost of operating a Wind or Solar plant is much less but that doesn’t mean your electric bill will be much less. The only thing that is lower is fuel. As always, everything else is subject to increasing costs. It will be a long time for renewables to cover start-up costs and pay for themselves, if ever. All of the other factors are subject to inflation, sourcing, land availability, public acceptance.
Renewables Fail Meet Expectations
Renewables must experience tremendous growth in order to approach worldwide needs. I doubt they could meet such needs. I doubt that renewables costs would ever result in lower utility bills. They haven’t so far where comparisons can be made!
Let me warn readers. It has been stated that some of these technologies have experienced tremendous growth. This is true on the surface. However, if you have one unit produced and you grow to two units, you have experienced a 100% growth. All of these technologies have grown. They have not grown sufficiently to be considered viable, however. I do not expect these technologies, as they now stand, to fulfill their promises in the future.
If one goes back to the estimates made by the EIA in 2020, one can see they were widely inaccurate. Part of the problem has been that wild assumptions that are only loosely associated with the present environment have been made. Research should be based on fact. Assumptions have been wrong as many times as they have been right. They certainly have not been right in the recent past.
It is also a new technology without the infrastructure to match. There is little hope of the necessary infrastructure being in place any time soon. They certainly will never reduce costs if they do become viable.
If you have any comments, let us know. Email me at rdm@datastats.com. We will try to print it in our next newsletter.
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