US energy policy is currently locked in a fierce battle between people who say renewables will make electricity less expensive and people who say they won’t.

ENB Pub Note: Doug Sheridan writes another great article on LinkedIn. It raises a key point: you need to think for yourself and look at the numbers. 

Matthew Yglesias writes in Bloomberg, US energy policy is currently locked in a fierce battle between people who say renewables will make electricity less expensive and people who say they won’t. You’d think there would be a reasonably clear answer to this question, but this a case where both sides have it wrong.

Environmentalists, citing the falling costs of wind turbines and photovoltaic panels, tend to agree with Bill McKibben that “power from the sun and wind is now the cheapest power in the world.” Meanwhile, Energy Secretary Chris Wright says that renewables “raise the system cost of electricity” because they are only intermittently available.

Our Take 1: The benefit of falling panel costs— which are so low they can represent less than 7% of total solar installation costs—is just the latest lazy math to infiltrate pro-renewables narrative. The fact is panel costs could fall by another 50% and it would have little effect on total costs of solar installations. Meanwhile, wind turbine costs are rising.

In fact, the best answer to the question of how renewables affect retail electricity prices is unsatisfying—it depends. As a new report from the Lawrence Berkeley National Laboratory makes clear, the extremely varied geography of the US means the cost per megawatt of generation is extremely variable. In addition, the economic value of a given increment of renewable energy depends on what else is going on.

The admin’s argument that wind and solar power are essentially useless because they’re not dispatchable on demand is wrong. For starters, batteries—which turn any source of electricity into a dispatchable one are getting better all the time. But beyond that, non-dispatchable power is useful because it complemnents other so of power.

A renewables-heavy electricity grid might function better, for example, with gas-fired plants that ramp up and down ccording to how hard the wind is blowing. The presence of wind turbines would still dramatically reduce gas consumption and therefore generation costs.

Our Take 2: Like so many, this analysis is incomplete. Fuel isn’t the only cost to the gas-fired generation needed when solar/wind + batteries inevitably don’t come through on cloudy/calm days. There’s also the capital and fixed annual costs to build and maintain the gas-fired plants. And don’t forget the extra capital needed to construct the transmission facilities needed to get power from far-flung solar farms to major points of consumption. That’s four layers of capital (solar/wind + batteries + backup dispatchable generation + new transmission) to make the solar dream “work.”

Our Take 3: We’re over a decade into the renewables investment craze, and mainstream news outfits still can’t properly evaluate the total system costs of renewables. Makes one wonder what else they’re getting so wrong, no?

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