From the MANHATTAN CONTRARIAN
Francis Menton
I've written many posts about the rising cost of electricity for residents of areas furthest along the path to fully renewable energy. These are places like Germany, the UK and California, where consumer electricity prices are two to three times higher than the US average. But is this difference the result of their race to switch to wind and solar power generation, or is it due to “bad luck” or something else? Even though electricity prices are skyrocketing in many of these places, proponents of wind and solar generation continue to claim that these resources are cheaper than the hydrocarbon alternatives. Are they right?
The most recent back-and-forth took place in the editorial pages of the Wall Street Journal. On August 20, Republican vice presidential candidate JD Vance published an editorial with the online headline “Harris Wages War on U.S. Energy.” He argued:
“The net zero project is already hampering investment in coal, natural gas and nuclear power plants that Americans depend on for reliable and affordable baseload electricity.”
On August 28, the Journal published a letter to the editor from a man named Mark Z. Jacobson. Jacobson is a professor at Stanford University and perhaps the most prominent proponent of the transition to electricity generation from entirely renewable sources, which he calls “WWS” (wind, water, solar), with some form of energy storage as a backup. Jacobson burst onto the scene in 2011 with a paper in an Elsevier publication called Science Direct, and in 2015 published a major work in PNAS titled “Cost-effective solution to grid reliability problem with 100% penetration of intermittent wind, water and solar for all purposes.” The subsequent accumulation of evidence has by no means slowed Jacobson down. For example, we have this January 2023 article in the Guardian, key quote: “Influential academic says renewables alone can stop climate crisis. … Wind, water and solar can provide abundant and cheap electricity, he argues, ending the carbon emissions that are driving the climate crisis.” And in case I haven't mentioned, Jacobson, through his follower Robert Howarth of Cornell University, is the driving force behind New York's Climate Leadership and Community Protection Act.
So let's look at Jacobson's August 28 WSJ letter. Here's the gist of it:
South Dakota, Montana, Iowa, Kansas, Oklahoma, Wyoming and North Dakota have overlooked this problem [of expensive renewable power]. Except for Montana, they are primarily powered by wind and are among the 12 states that get the highest share of their electricity from clean, renewable sources. How do the 12 states with high levels of renewable energy fare in terms of electricity prices? Ten of them are among the 19 states with the lowest electricity prices. Seven are among the 10 states with the lowest prices. South Dakota, where renewable energy meets 95% of demand, has the ninth lowest electricity price. North Dakota (52% renewable) has the lowest. More renewable energy means lower prices.
Is there any truth to this? Well, let's look at a few states individually.
Jacobson cites South Dakota as his main example. He says that renewable energy “[] 95% of demand,” and yet the state has the “ninth lowest electricity price.” Does publicly available data support this statement?
The answer is that publicly available data for South Dakota is quite inconsistent and contradictory, but no matter how you look at it, it is not even close to enough to support Jacobson's claim. Here is a page on South Dakota from the Department of Energy's Energy Information Administration with an update date of August 15, 2024. The data:
In 2023, wind provided 55% of South Dakota's total net electricity generation. Wind surpassed the state's previous primary source of electricity, hydropower, for the first time in 2021. Hydropower accounted for 21% of the state's electricity generation in 2023. . . . Renewable resources generated 77% of the state of South Dakota's total electricity in 2023, almost entirely from wind and hydropower.
It says “renewables” provided 77% of South Dakota's electricity generation, not the 95% Jacobson claimed; and of the 77%, 21% came from hydroelectric power from dams on the Missouri River. Sorry if your state doesn't have a Missouri River to mimic that. Wind power provided only 55%. Yes, that's better than most years on El Hierro, but still a long, long way from zero-emissions electricity generation.
And now let's take a look at the very different data from the South Dakota Public Utilities Commission for 2023. This data is for electricity “consumed” in South Dakota, not electricity “generated” in South Dakota, which may or may not explain the huge discrepancy. Here's the PUC's pie chart:
Suddenly coal is by far the largest source at 36.13%, larger than the “renewables” of wind, solar and hydro combined (32.35%). Perhaps all the rest of the wind generation is given away to neighboring states during periods of excess generation when SD can't use it. I have no way of knowing.
Where did our friend Jacobson get the statistic that South Dakota “95% of [electricity] demand from renewable energy”? I have no idea. Most likely he is relying on the principle that leftists and climate activists are not fact-checked.
Here's the EIA's “average electricity price for utility customers” chart for June 2024 (most recent month available). The states aren't sorted by price, but if I'm counting correctly, South Dakota has the 16th lowest residential electricity prices among the states and the 22nd lowest prices for “all sectors” combined. Not bad, but also not nearly as high as the “ninth lowest” Jacobson claims.
Should we try another state? Next on Jacobson's list is Montana. Jacobson acknowledges that Montana “is not primarily powered by wind,” but then says it is “among the 12 states that get the highest share of their electricity from clean, renewable sources.” Upon closer inspection, it turns out again that Montana's secret is the dams on the Missouri River. The EIA (which advocates “renewable energy” without saying which one they're talking about) has this to say:
In 2023, Montana was among the top 10 states with the largest share of electricity generated from renewable energy, about 50%. Coal-fired power plants provided the largest share of electricity generation in Montana in 2023, accounting for 45% of the state's electricity generation.
But how much of that 50% from “renewables” is hydropower from the Missouri River dams, how much is wind, and how much is other energy? The best source I can find for this is this report from the Montana legislature with a release date of 2023 but data that only goes through 2021. A graph on page 24, going through 2021, shows that about 40% of electricity generation comes from coal, another 40% from hydropower, and about 10% from wind. There is a sizable, unspecified “other” category.
And one more thing: In the EIA's June 2024 chart, Montana's electricity prices are the 12th lowest among the states for residential electricity and the 11th lowest for “all sectors.”
So Jacobson's first two examples aren't enough to support his argument. Looking at the other states he cites, I think Iowa supports his argument the best, so let's look at that one.
Iowa, for better or worse, has gone further than any other state in building wind turbines to provide electricity. According to the EIA here, wind turbines generated 62% of Iowa's electricity in 2022, which was the highest percentage of any state. According to another EIA page here, Iowans purchased 54,203,955 MWh of electricity in 2022, which would equate to an average demand of 6188 MW (divided by 8760). The Iowa Utilities Commission tells us here the generating resources Iowa has deployed to meet that demand: 12,543 MW of wind capacity, 5543 MW of coal, 4148 MW of natural gas, 5253 MW of petroleum, and small amounts of others. This tells us that Iowa had enough generating resources to meet the demand before it started building wind turbines. It has built more than twice the number of wind turbines alone compared to the average demand, and when you add it all up, it has more than four times the overbuilding. Clearly, Iowa has a lot of energy generation resources sitting idle most of the time. And whatever the average electricity prices are, they could be much lower if they stopped extracting large amounts of mostly idle capital.
How do Iowa's rates compare nationally? According to the same EIA chart, they are the 22nd lowest for residential properties and the 10th lowest for “all sectors.”
Two comments:
(1) Iowa has doubled the capacity of its wind turbines and generated 62% of its electricity from wind power. This pushes Iowa to the limits of what can be achieved by building more wind turbines alone. So far, the state has barely made its first steps into the world of energy storage. In the future, the state will quickly find that more wind turbines can only marginally increase the share of wind power in electricity generation. Buying batteries is completely uneconomical and not a viable solution.
(2) Wind power prices are heavily distorted by the myriad of tax incentives and subsidies available to wind developers. First, there are the federal investment tax credits (30% of the net present value of the wind turbine investment) and the federal production tax credits (2.75 cents per kWh of electricity generated). Then there is the complete property tax exemption for five years from the state of Iowa. There are several federally guaranteed loan programs with subsidized interest rates. There are subsidies of all kinds from agencies such as the Department of Agriculture and the Rural Electrification Administration.
So how much are all these subsidies and grants worth to consumers in the price of electricity? It's all completely opaque. An informed citizen cannot find out. The subsidies are easily worth 5 cents per kWh, probably more like 10 or even 15 cents per kWh. If you add in the value of the subsidies, Iowa would not be in the lower ranks of electricity prices, but rather right at the top.
So when Jacobson recommends building wind turbines to reduce electricity prices, he is not actually saying that they are economically cheaper; he is just saying that sufficient subsidies are available to make consumer prices appear cheaper. He is using GKAM accounting.
Whatever the case, we'll see if Iowa and its fellow wind energy advocates can keep marching toward a 100% zero-emissions future. I'd be the first to congratulate them if they do it. But let's be honest – they can't. And when they start adding storage, their prices will skyrocket.
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