The actual prices of wind and solar – count on?

Guest contribution by Willis Eschenbach

I keep reading that wind and sun are finally cheaper than fossil fuels … and every time I read it my Urban Legend detector rings like crazy.

It rings in part because the market is replacing energy sources very efficiently based on their cost. For example, here is the story of kerosene that I wrote about the accent:

When a clean-burning kerosene lamp invented by Michael Dietz came onto the market in 1857, its effect on the whaling industry was immediately noticeable. Kerosene, known at the time as “Coal Oil”, was easy to manufacture, cheap, smelled better when burned than animal fuels and did not spoil like whale oil on the shelf. The public left waloil lamps almost overnight. At least 30 kerosene plants were produced in the United States by 1860, and whale oil was eventually driven off the market. When sperm oil fell to 40 cents a gallon in 1895 due to a lack of demand, refined petroleum, which was in high demand, sold for less than 7 cents a gallon. …

My question was: if wind and sun are so cheap, why don’t they replace traditional sources overnight?

So I decided to investigate the question. The main number used to assess how expensive an energy source can be is known as the “LCOE”, the Levelized Cost of Energy. It takes into account all the costs of new power plants – capital costs, overheads and maintenance costs, fuel costs, financing costs, the full cost spectrum for that power source. Well … except for one cost, but we’ll get to that later.

Here is the latest information on LCOE for various energy sources from the US Energy Information Administration (EIA) 2021 report entitled Levelized Costs of New Generation Resources.

Figure 1. Electricity generation costs of the US-American IEA, 2021.

And yes, that clearly says that onshore wind and stand-alone solar power are cheaper than any other source of energy.

I looked at this and my Urban Legend detector started blinking red and the needle stuck out … why?

Because of the numbers in the first column, the “capacity factor”. The capacity factor for a power plant is the percentage of the “nameplate” generation that it actually produces. For example, if a windmill’s nameplate says it produces 16 gigawatt hours (GWh or 109 watt hours) per year when it runs 24/7/365, and due to the intermittent nature of the wind, it actually only produces a quarter of that, then it would be its “capacity factor” 25%.

I looked at the claimed capacity factors for wind and solar power, which US EIA folks say are 40% + and 30%, respectively, and thought, “Absolutely not. Not possible.”

Now part of the error in the solar capacity factor is explained in footnote 4, namely:

4Technology is assumed to be photovoltaics (PV) with uniaxial tracking. The solar hybrid system is a single-axis PV system coupled with a four-hour battery storage system.

Why is that a problem? Well, because tracking systems have to move each individual solar panel at a constant speed during the day so that the panels are always facing the sun. At the end of the day, they turn the panel back to its original position. Unlike fixed systems, these require complex installation of motors, time sensors, bearings, levers and the like to rotate the disks.

And because such mechanical “single-axis tracking” systems are expensive to install, expensive to operate, expensive to maintain and are weather-related, such systems are only very rarely used in a grid-scale solar park. Almost without exception, these are angle-stable systems in which the panels are securely attached to a (theoretically) windproof frame, as is the case below at the Topaz Lake Solar Farm solar park.

Figure 2. Fixed mounts for solar panels, Topaz Lake Solar Farm, one of the largest in the world.

When you imagine the motors, gears, levers, and other mechanisms required in a single axis tracking system to turn every one of those nine million! Solar panels, to follow the sun all day, you will understand why fixed solar panels are the norm for grid-scale installations.

In any case, I thought I was going to find the real data on this capacity factor issue. The amazing resource, Our World In Data, has all the information you need. Here is the current average of all real wind and solar systems in the world in the last year for which we have data, 2019.

Figure 3. Actual and theoretical (nameplate) generation, data for 2019.

As you can see, the US IEA is far in fantasy land when it comes to the capacity factors of wind and sun. In both cases, they take up much larger capacity factors than we have here in the real world.

In Figure 1, they now claim staggered costs in US cents per kilowatt hour:

  • Combi gas – 3.45 ¢ per kWh
  • Solar – 2.90 ¢ per kWh
  • Onshore wind – 3.15 ¢ per kWh

This is the basis for claiming that renewable energy is the cheapest source of electricity today. However, given the actual capacity factors, these costs are in reality:

  • Combi gas – 3.45 ¢ per kWh
  • Solar – 6.21 ¢ per kWh
  • Onshore wind – 4.97 ¢ per kWh

“Cheapest Sources”? No way.

And when it comes to offshore wind, they’re just as far away. They claim 11.5 ¢ per kWh, but the new Block Island offshore wind farm charges the supplier, not the customer, but the supplier, 24.4 ¢ per kWh …

And finally there is a huge elephant in the US EIA area … emergency power. This is the missing cost that I mentioned above.

If you add a gigawatt of unreliable intermittent renewable wind or solar power to a system, so can you must add an extra gigawatt of a kind of reliable, switchable energy, where “reliable” means that you can turn it up or down as you like to replace renewable energies when there is neither wind nor sun. The US EIA Levelized Cost document linked above mentions the need for backups … but it doesn’t even affect backup costs. All it says is:

Since the load must be continuously balanced, generating units with the ability to vary performance to keep up with demand (disposable technologies) generally have more value to a system than less flexible units (non-dispatchable technologies) that have intermittent resources for use the operation. The LCOE values ​​for disposable and non-dispatchable technologies are listed separately in the following tables, as the comparison must be made carefully.

They say that disposable technologies have “more value to a system” … but they do not mention that “more value” leads to higher real costs for non-disposable renewable technologies.

How much higher Well … don’t say. But you can be sure that it won’t be free. As an absolute minimum, it is the capital costs of the switchable backup generator plus part of the other fixed, variable and transmission costs … and that means that due to the costs of the backup generators required, the probability that sun and wind will be very low is very low ever be competitive with other methods.

TL; DR version: Neither wind nor solar are ready for prime time and due to their need for emergency power, they may never be ready.

Here on the hill above the sea, my beautiful ex-fiancée and I are preparing to visit relatives in North Florida. We will be out for about three weeks from Tuesday and leave our daughter and son-in-law here in the house to enjoy the sun. If you live and want to meet in northern Florida, drop me a line on the open thread on my blog. Just enter your city name without entering your phone or email. I’ll email you when we get there. No guarantees, but it’s always fun to speak to WUWT readers in person. I will likely be posting regular updates on our trip on my Skating Under The Ice blog for those interested.

All my best



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