The first chart tells it all, although the final one showing wind/solar's rise vs. flat electricity production in combination with the rising costs of electricity in Minnesota is also quite informative. great article, thanks
Energy Bad Boys hit a home run with this essay. Yet, being an engineer I must point out a couple of issues. First, I was unsure what the term "Green Plating" referred to. Yes, it is an amusing play on the older term "gold plating" which referred to running up the cost of a project. However, this is a confusing point for ratepayers. Many people are very skeptical of the utility argument that wind and solar have no fuel cost thus must be the lowest cost alternative because their power bills are rising fast, yet can't quite refute the utility's logic about fuel cost. We need to rectify this very clearly.
One approach to crystallizing the argument is to point to empirical data that show rising costs as a function of renewables penetration. The Concerned Household Electricity Consumers Council (CHECC) in their lawsuit against the EPA is taking this route. However, there is quite a bit of noise in the empirical data which gives opponents a means to cloud the issue. Recognizing this flaw, I wrote a contribution for What's Up With That (WUWT) last autumn that deconstructed the utility rate setting process to show, specifically, why rates will rise with wind/solar (https://wattsupwiththat.com/2023/11/05/setting-utility-rates/).
What you fellows call Green Plating is what specifically amounts to return on capital -- it is "paying for access to capital markets". Wind/solar add to the utility's rate base, and then will cost the rate payers in aggregate the rate base addition times the allowed return on rate base. So far, this appears no different than it would with thermal assets. However, because thermal assets that once were adequate to run the grid on their own are now being used to balance wind/solar intermittently, the addition of wind/solar lowers the capacity factor of other assets on the grid what results is higher rate of return cost per unit of delivered energy which cannot do anything but raise rates.
Poor utilization of capital dominates, and I mean dominates, the entire energy evolution. You guys mention needed additions to long-haul transmission lines. These are needed for relatively low probability failures of local sources of total energy (an issue of renewables) -- i.e. they represent a poor capacity factor and poor utilization of capital. The worst problem with all of this is cost of storage. Using just 2023 data, I estimated that rate base in our balancing authority area will rise from its current $17,000 per ratepayer to well over $100,000 and perhaps to twice that per ratepayer in order to maintain constant reliability.
Think of the opportunity costs that this poor utilization of capital represents.
BTW, thanks for the reference to Mark Christie's commentary at the FERC. I come here to learn and I am never disappointed.
Excellent analysis. You are exactly right about the cost of maintaining a reliable grid. When you flick the switch the lights MUST come on. I will be using the term Levelized Cost of Intermittency.
It seems states do have a policy of increasing transmission to neighboring states to make up for the shortfall caused by Clean Energy Policies. For Virginia Dominion Energy thinks it will be importing 10,800 MW from neighboring states, whilst PJM are shutting down 40,000 MW of depreciated dispatchable power.
If you don't have a plan to meet demand in your own state eventually you run out of other people’s electricity.
Another great article! Every one of them is like a present to me. Keep 'em coming!
For anyone who might be interested, look into Molten Salt Reactors. Designed and developed in the 50's with one running for several years at Oak Ridge in the 60's. Small fuel consumption (thorium, which is plentiful and not radioactive) and little waste. Why aren't these running everywhere? Our government wanted fuel that could be converted to nuclear bombs - so out with the MSR idea! Simple as that!
The initial fuel in the molten salt reactor experiment was uranium 235. Subsequently, the reactor was fueled with uranium 233. Although uranium 233 comes from thorium, the uranium 233 in the reactor did not come from thorium in the reactor. It was imported. Contrary to popular belief, the molten salt reactor experiment was not a functional thorium breeder reactor. Considerable time and money will be required to make a functional thorium reactor. Whether such a design is cost-effective, is unknown.
I'm working on a piece about nuclear power and recently learned a little more about molten salt for cooling. Didn't know that's what Oak Ridge used - thanks for that. We need nuclear power plants!
If you haven't read or seen it, I would recommend "Thorium," by Robert Hargraves. Very good work, written in plain language (that is, very little physics, just lots of explanation).
One point that you make, but is under appreciated is that the System LCOE for renewbales increases as pentration increases. The System LCOE for the first renewables on the grid are equal to the Unit LCOE because you don't need the additional System costs. The System LCOE begins to diverge from Unit LCOE as more higher cost solutions are required to support intermittancy.
The chart on page 4 of MISO's Renewable Integration Study demonstrates the complexity that arises from more renewables. Has anyone seen an "LCOE System Cost Curve" that would parallel this chart?
Very useful report; thanks for it. Obviously each balancing authority area or RTO or ISO will face slightly different challenges at different times of day and in different seasons.
Nothing comes to mind on the cost front but we’ve always wanted to see where the marginal cost would no longer be zero if you started with zero wind and solar and scaled it up.
Exactly. That is my point. The Unit LCOE equals the System LCOE for renewables until it doesn't. Would be great to understand what that System LCOE curve looks like as penetration increases
thank you, LCOE cannot and should not be used to compare intermitten solar and wind with despatchable coal, gas, or nuclear. It is important to get this information to the decision makers about energy policy and investments
my recent articel at Eurasia Review on the same subject
Really Great article and analysis, guys. Lazard should be summoned to the Ministry of Truth and forced to apologize. LCOE has enabled the feeble minded to yell WIND IS CHEAPER for years. They are substantially responsible for the trillions wasted on wind and solar.
We might peel the curtain back more on Lazard in a future piece. Some of their assumptions aren’t terrible if taken as investment advice but they are awful from a system planning perspective. That’s kind of on Lazard and kind of on the people who knowingly misrepresent what they say
Good work on breaking down the myth of cheap renewables. Unfortunately, most politicians seem to think electricity comes from the outlet and don’t consider the system wide costs.
Thanks for creating a new standard of evaluation that is so much more realistic! BTW, overbuilding to compensate for intermittancy is a terrible policy. It gobbles up much, much more acreage, and still is WORTHLESS when there is almost NO wind or sun; it only helps when wind and sun are LOW but over about 8 mph. When the wind speed is less than 7 or 8 mph, for example, the wind turbine output is ZERO, no matter how many turbines there are. What a waste!
Would also recommend an essay written last year by James Conca entitled "How to compare energy sources—Apples to apples. Published by Nuclear News, 15 June 2023. Also, a recent paper by J. Hayes and T. Nash from the Mackinac Center titled "Grading the Grid."
Both papers offer sound comparisons of energy sources, although I think the latter is a bit more subjective.
No. It means the states that are driving wind and solar development should have to pay for the transmission lines their policies necessitate regardless of where those assets are located.
Think of the Wall Street three card. Monty game of EBITDA when thinking of LCOE. It’s almost that simple. If Warren Buffet and Charlie Munger thought EBITDA was bullshit, and it is, they also no doubt realized that the LCOE for renewables is Bullshit. Note Berkshire Hathaway has a a lot of Transmission assets in the portfolio, not sure but would guess BH does not own a lot of renewable assets. Where batteries make sense no one wants to employ them. Think small scale run of river hydros, which can not pond overnight, due to many local, state and federal restrictions. A battery station that can match the nameplate generation of the hydro station would/could provide near base load electricity to a local load. If the locality didn’t want to pay for the option than the Day Ahead Markets for the hydro and batteries become viable as well. As long as market prices support the cost of storage and generation. It seems clear on the larger scale the Nukes and Gas stations providing base load carry a distinct advantage over anything else currently. Using smaller generators on local load basis only enhance the big base load producers. Further how the Hell doesn’t anyone who can put fog on a mirror think that we can spend $700 billion to reenforce the existing grid, when the IOU’s can’t maintain the grid which we have already. Think time line, Boston’s Big Dig started out as a 7 year 3-4 billion dollar project. 25 years, $20 billion later, and it in essence is still a work in progress and did not alleviate the traffic congestion problem that existed prior to the start of the project. Imagine the time line and expense to rebuild a bridge span over a body of water connecting a major port to the open sea lanes of the world, and connecting a major land transportation corridor on the east coast of the USA. Without the onerous local, state and federal involvement they are estimating a 10 year time line and no estimate of the cost. So you want to rebuild the grid to support the grifters in the wind and solar business. Step right up and see the two headed boy and the worlds tallest midget and shortest giant!
Yes, Berkshire Hathaway has extensive holdings in renewables (Mid-American Energy, among others). But, Buffett has been quoted as saying "I will do anything that is basically covered by the law to reduce Berkshire's tax rate. For example, on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit."
That comment is in reference to the "reading now" section at the bottom of the article.
In the case of PJM, wind interests in Missouri and Virginia are trying to to force PJM to spend transmission money on infrastructure for them to move energy through PJM instead of PJM spending money on their internal needs.
Thank you for this article, Isaac and Mitch. We have cited your work in presentations with audiences totaling many thousands of people. The presentations include large public gatherings, Town Hall meetings, and radio and print interviews. Your explanations are elegant to the extent that complex subjects are understandable for most people. One Alliant engineer said he was going to have to check out your work based on us citing it. If you are attracting more trolls, we may be partly to blame ;)
I did not! Thank you so much for sharing. The Alliant engineer with whom I spoke admitted that the Weather-based Energy facilities they are pushing will increase rates. While that is logical, I couldn't believe the admission. By the way, is "Weather-based Energy" a term you coined? I feel like we often have trouble communicating because the narrative deck has been stacked against us for decades. "Weather-based Energy" is perfect because it suggests the lack of reliability and intermittency that plagues wind and solar.
The first chart tells it all, although the final one showing wind/solar's rise vs. flat electricity production in combination with the rising costs of electricity in Minnesota is also quite informative. great article, thanks
Energy Bad Boys hit a home run with this essay. Yet, being an engineer I must point out a couple of issues. First, I was unsure what the term "Green Plating" referred to. Yes, it is an amusing play on the older term "gold plating" which referred to running up the cost of a project. However, this is a confusing point for ratepayers. Many people are very skeptical of the utility argument that wind and solar have no fuel cost thus must be the lowest cost alternative because their power bills are rising fast, yet can't quite refute the utility's logic about fuel cost. We need to rectify this very clearly.
One approach to crystallizing the argument is to point to empirical data that show rising costs as a function of renewables penetration. The Concerned Household Electricity Consumers Council (CHECC) in their lawsuit against the EPA is taking this route. However, there is quite a bit of noise in the empirical data which gives opponents a means to cloud the issue. Recognizing this flaw, I wrote a contribution for What's Up With That (WUWT) last autumn that deconstructed the utility rate setting process to show, specifically, why rates will rise with wind/solar (https://wattsupwiththat.com/2023/11/05/setting-utility-rates/).
What you fellows call Green Plating is what specifically amounts to return on capital -- it is "paying for access to capital markets". Wind/solar add to the utility's rate base, and then will cost the rate payers in aggregate the rate base addition times the allowed return on rate base. So far, this appears no different than it would with thermal assets. However, because thermal assets that once were adequate to run the grid on their own are now being used to balance wind/solar intermittently, the addition of wind/solar lowers the capacity factor of other assets on the grid what results is higher rate of return cost per unit of delivered energy which cannot do anything but raise rates.
Poor utilization of capital dominates, and I mean dominates, the entire energy evolution. You guys mention needed additions to long-haul transmission lines. These are needed for relatively low probability failures of local sources of total energy (an issue of renewables) -- i.e. they represent a poor capacity factor and poor utilization of capital. The worst problem with all of this is cost of storage. Using just 2023 data, I estimated that rate base in our balancing authority area will rise from its current $17,000 per ratepayer to well over $100,000 and perhaps to twice that per ratepayer in order to maintain constant reliability.
Think of the opportunity costs that this poor utilization of capital represents.
BTW, thanks for the reference to Mark Christie's commentary at the FERC. I come here to learn and I am never disappointed.
Thanks, Kevin! We’ve been approached about doing a project in Wyoming. We might be reaching out to you to ask a few questions if you’re willing!
Happy to help in any manner. I'm retired, so everyday I have nothing but time.
Perfect! We’ll reach out to you via the email address we have on file for you if that’s ok.
Do.
Excellent analysis. You are exactly right about the cost of maintaining a reliable grid. When you flick the switch the lights MUST come on. I will be using the term Levelized Cost of Intermittency.
It seems states do have a policy of increasing transmission to neighboring states to make up for the shortfall caused by Clean Energy Policies. For Virginia Dominion Energy thinks it will be importing 10,800 MW from neighboring states, whilst PJM are shutting down 40,000 MW of depreciated dispatchable power.
If you don't have a plan to meet demand in your own state eventually you run out of other people’s electricity.
The problem with California energy policy is eventually you run out of other peoples electricity
Another great article! Every one of them is like a present to me. Keep 'em coming!
For anyone who might be interested, look into Molten Salt Reactors. Designed and developed in the 50's with one running for several years at Oak Ridge in the 60's. Small fuel consumption (thorium, which is plentiful and not radioactive) and little waste. Why aren't these running everywhere? Our government wanted fuel that could be converted to nuclear bombs - so out with the MSR idea! Simple as that!
The initial fuel in the molten salt reactor experiment was uranium 235. Subsequently, the reactor was fueled with uranium 233. Although uranium 233 comes from thorium, the uranium 233 in the reactor did not come from thorium in the reactor. It was imported. Contrary to popular belief, the molten salt reactor experiment was not a functional thorium breeder reactor. Considerable time and money will be required to make a functional thorium reactor. Whether such a design is cost-effective, is unknown.
Can the molten salt system as a coolant be used with other radioactive fuels instead of thorium? I'm just learning.
Thanks, Jeff! That’s a huge compliment!
I'm working on a piece about nuclear power and recently learned a little more about molten salt for cooling. Didn't know that's what Oak Ridge used - thanks for that. We need nuclear power plants!
If you haven't read or seen it, I would recommend "Thorium," by Robert Hargraves. Very good work, written in plain language (that is, very little physics, just lots of explanation).
Thanks!
GREAT ARTICLE BOYS!!
One point that you make, but is under appreciated is that the System LCOE for renewbales increases as pentration increases. The System LCOE for the first renewables on the grid are equal to the Unit LCOE because you don't need the additional System costs. The System LCOE begins to diverge from Unit LCOE as more higher cost solutions are required to support intermittancy.
The chart on page 4 of MISO's Renewable Integration Study demonstrates the complexity that arises from more renewables. Has anyone seen an "LCOE System Cost Curve" that would parallel this chart?
https://cdn.misoenergy.org/RIIA%20Summary%20Report520051.pdf
Very useful report; thanks for it. Obviously each balancing authority area or RTO or ISO will face slightly different challenges at different times of day and in different seasons.
Nothing comes to mind on the cost front but we’ve always wanted to see where the marginal cost would no longer be zero if you started with zero wind and solar and scaled it up.
The first amounts of wind and solar on a grid are free riders, parasites on a functioning system.
You don’t see the real costs until you have too much
Exactly. That is my point. The Unit LCOE equals the System LCOE for renewables until it doesn't. Would be great to understand what that System LCOE curve looks like as penetration increases
The gridiots will fight to hide that as it destroys their arguments
This 'article' - and I use the term loosely here - is garbage put out by a useful idiot for BigFossilFuels.
Get the real FACTS:
https://cleantechnica.com/2022/09/06/switching-the-world-to-renewable-energy-will-cost-62-trillion-but-the-payback-would-take-just-6-years/
But wait, there's more:
https://reneweconomy.com.au/stanford-study-demonstrates-100-renewable-us-grid-with-no-blackouts/
So who're going to go with? This Quisling and his bullshit, or the Science?
👏 Verry well researched and written again boys!
Thanks Kilovar!
The capacity is low so they try to compare megawatt to megawatt.
But to get one MW of solar over a year I must build 5 as the availability is only 20% here in Alberta.
It is my proposal that if a generator is capable of less than 80% then it should have to install backup, batteries or other, for 2 hours.
So if you build a 500mw solar far you must install 1000mwhr of batteries that can be discharged at 500perhour.
Also, you have to list it based on yearly average, so that 500mw is only 100 but the storage remains the same.
And that finishes the farce.
thank you, LCOE cannot and should not be used to compare intermitten solar and wind with despatchable coal, gas, or nuclear. It is important to get this information to the decision makers about energy policy and investments
my recent articel at Eurasia Review on the same subject
https://unpopular-truth.com/2024/03/08/energy-trilemma/
our peer-reviewed paper on the subject, Schernikau et al 2022
https://dx.doi.org/10.2139/ssrn.4000800
Thanks, Lars. I’ve had this paper printed and sitting on my desk to read for longer than I care to admit!
Really Great article and analysis, guys. Lazard should be summoned to the Ministry of Truth and forced to apologize. LCOE has enabled the feeble minded to yell WIND IS CHEAPER for years. They are substantially responsible for the trillions wasted on wind and solar.
As to the Nuclear argument - France.
We might peel the curtain back more on Lazard in a future piece. Some of their assumptions aren’t terrible if taken as investment advice but they are awful from a system planning perspective. That’s kind of on Lazard and kind of on the people who knowingly misrepresent what they say
Point taken….I do question “knowingly”
Hahaha. Same
Good work on breaking down the myth of cheap renewables. Unfortunately, most politicians seem to think electricity comes from the outlet and don’t consider the system wide costs.
Keep up the good work!
Thank you Penguin! I’ve been meaning to read your tailpipe article but haven’t got to it yet.
Yee Haw, Baddest Boys.
Excellent article and summary of the “cheap green energy” fallacy.
When the green energy fantasies meet the harsh realities of economics and physics, economics and physics prevail every time.
Thanks for creating a new standard of evaluation that is so much more realistic! BTW, overbuilding to compensate for intermittancy is a terrible policy. It gobbles up much, much more acreage, and still is WORTHLESS when there is almost NO wind or sun; it only helps when wind and sun are LOW but over about 8 mph. When the wind speed is less than 7 or 8 mph, for example, the wind turbine output is ZERO, no matter how many turbines there are. What a waste!
Would also recommend an essay written last year by James Conca entitled "How to compare energy sources—Apples to apples. Published by Nuclear News, 15 June 2023. Also, a recent paper by J. Hayes and T. Nash from the Mackinac Center titled "Grading the Grid."
Both papers offer sound comparisons of energy sources, although I think the latter is a bit more subjective.
PJM has been involved in court battles over this very subject
States shouldn’t have to pay for transmission driven by other states’ policies: FERC’s Christie from Utility Dive:
“States shouldn’t have to pay for transmission driven by other states’ policies”
Wouldn’t that mean creating a completely self-reliant state grid, unconnected to the North American grid?
No. It means the states that are driving wind and solar development should have to pay for the transmission lines their policies necessitate regardless of where those assets are located.
Think of the Wall Street three card. Monty game of EBITDA when thinking of LCOE. It’s almost that simple. If Warren Buffet and Charlie Munger thought EBITDA was bullshit, and it is, they also no doubt realized that the LCOE for renewables is Bullshit. Note Berkshire Hathaway has a a lot of Transmission assets in the portfolio, not sure but would guess BH does not own a lot of renewable assets. Where batteries make sense no one wants to employ them. Think small scale run of river hydros, which can not pond overnight, due to many local, state and federal restrictions. A battery station that can match the nameplate generation of the hydro station would/could provide near base load electricity to a local load. If the locality didn’t want to pay for the option than the Day Ahead Markets for the hydro and batteries become viable as well. As long as market prices support the cost of storage and generation. It seems clear on the larger scale the Nukes and Gas stations providing base load carry a distinct advantage over anything else currently. Using smaller generators on local load basis only enhance the big base load producers. Further how the Hell doesn’t anyone who can put fog on a mirror think that we can spend $700 billion to reenforce the existing grid, when the IOU’s can’t maintain the grid which we have already. Think time line, Boston’s Big Dig started out as a 7 year 3-4 billion dollar project. 25 years, $20 billion later, and it in essence is still a work in progress and did not alleviate the traffic congestion problem that existed prior to the start of the project. Imagine the time line and expense to rebuild a bridge span over a body of water connecting a major port to the open sea lanes of the world, and connecting a major land transportation corridor on the east coast of the USA. Without the onerous local, state and federal involvement they are estimating a 10 year time line and no estimate of the cost. So you want to rebuild the grid to support the grifters in the wind and solar business. Step right up and see the two headed boy and the worlds tallest midget and shortest giant!
Yes, Berkshire Hathaway has extensive holdings in renewables (Mid-American Energy, among others). But, Buffett has been quoted as saying "I will do anything that is basically covered by the law to reduce Berkshire's tax rate. For example, on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit."
Why hasn’t “the market” required Nuclear generators to declare how they will pay for :
- radiation accidents by operators?
- radiation accidents by earthquakes, floods, etc?
- impossible-to-buy Liability Insurance? (Canada requires only $500M limits - the expected settlement of the Lac Mégantic railway disaster!)
- co$t overruns that need government subsidies? (Why invest?)
- NuclearWaste storage for 300,000 years? (No location after 79years!)
- potential terrorism?
Society seems to have been sold a bill of goods by scientists & engineers who long ago left Earth.
Almost makes one believe in Satan. 😈
That comment is in reference to the "reading now" section at the bottom of the article.
In the case of PJM, wind interests in Missouri and Virginia are trying to to force PJM to spend transmission money on infrastructure for them to move energy through PJM instead of PJM spending money on their internal needs.
Thank you for this article, Isaac and Mitch. We have cited your work in presentations with audiences totaling many thousands of people. The presentations include large public gatherings, Town Hall meetings, and radio and print interviews. Your explanations are elegant to the extent that complex subjects are understandable for most people. One Alliant engineer said he was going to have to check out your work based on us citing it. If you are attracting more trolls, we may be partly to blame ;)
That’s awesome. Thank you for doing the legwork, Martin and I’m glad our materials have been helpful for you. Did you see this? https://energynews.us7.list-manage.com/track/click?u=ae5d3a0c6088cad29d71bf0d0&id=9d6746df0a&e=ff6eea3405
I did not! Thank you so much for sharing. The Alliant engineer with whom I spoke admitted that the Weather-based Energy facilities they are pushing will increase rates. While that is logical, I couldn't believe the admission. By the way, is "Weather-based Energy" a term you coined? I feel like we often have trouble communicating because the narrative deck has been stacked against us for decades. "Weather-based Energy" is perfect because it suggests the lack of reliability and intermittency that plagues wind and solar.
We usually call them weather dependent but weather based is probably better at conveying how unreliable they are