Why unreliable energy is not cheap

Another clear explanation of the increasingly familiar story of rising power prices as more wind and solar power complicate the grid while they still have to be backed up by gas and coal.

The main reason appears to have been predicted by a young German economist in 2013.

In a paper for Energy Policy, Leon Hirth estimated that the economic value of wind and solar would decline significantly as they become a larger part of electricity supply.

The reason? Their fundamentally unreliable nature. Both solar and wind produce too much energy when societies don’t need it, and not enough when they do.

Solar and wind thus require that natural gas plants, hydro-electric dams, batteries or some other form of reliable power be ready at a moment’s notice to start churning out electricity when the wind stops blowing and the sun stops shining.

And unreliability requires solar- and/or wind-heavy places like Germany, California and Denmark to pay neighboring nations or states to take their solar and wind energy when they are producing too much of it.

Hirth predicted that the economic value of wind would decline 40% once it reached 30% of electricity, and that the value of solar would drop by 50% when it reached 15% of electricity.

In 2017, the share of electricity coming from wind and solar was 53 percent in Denmark, 26 percent in Germany, and 23 percent in California. Denmark and Germany have the first and second most expensive electricity in Europe.

By reporting on the declining costs of solar panels and wind turbines but not on how they increase electricity prices, journalists are — intentionally or unintentionally — misleading policymakers and the public about those two technologies.

This entry was posted in Global warming and climate change policy, Rafe. Bookmark the permalink.

37 Responses to Why unreliable energy is not cheap

  1. Roger

    By reporting on the declining costs of solar panels and wind turbines but not on how they increase electricity prices, journalists are — intentionally or unintentionally — misleading policymakers and the public about those two technologies.

    Policy makers taking advice from journalists?

    That is peak stupidity.

  2. Rafe Champion

    Our energy policy is approaching peak stupidity, I wonder if the full story will ever be told? Where would you start?

  3. Iva Right

    And the politicians look us directly in the eyes as they lie to us about this!

  4. stackja

    Voters are treated like mushrooms.

  5. stackja

    https://www.earthhour.org.au/
    The fight for our planet’s future is on!
    Australia is home to some of the world’s most iconic and breathtaking natural landscapes and wildlife. But climate change is putting all this at risk.

    Sign up to switch off at 8.30pm on Saturday, 30 March 2019, and join millions of people in over 180 countries to show the need for stronger climate action.
    It’s time to switch off and #Connect2Earth.

  6. N U C L E A R || P O W E R

    Why I changed my mind about nuclear power | Michael Shellenberger | TEDxBerlin

    For more information on Michael Shellenberger, please visit http://www.tedxberlin.de. Michael Shellenberger is co-founder and Senior Fellow at the Breakthrough Institute, where he was president from 2003 to 2015, and a co-author of the Ecomodernist Manifesto. Over the last decade, Michael and his colleagues have constructed a new paradigm that views prosperity, cheap energy and nuclear power as the keys to environmental progress. A book he co-wrote (with Ted Nordhaus) in 2007, Break Through: From the Death of Environmentalism to the Politics of Possibility, was called by Wired magazine “the best thing to happen to environmentalism since Rachel Carson’s Silent Spring,” while Time Magazine called him a “hero of the environment.” In the 1990s, he helped protect the last signi cant groves of old-growth redwoods still in private hands and bring about labor improvements to Nike factories in Asia. This talk was given at a TEDx event using the TED conference format but independently organized by a local community.

  7. Incogneto

    The Sheeple don’t know how bad it is or how worse it will become. Most politicians are NWO advocates they do as their Puppet Masters tell them what to do. The Fix is in!

  8. Just consider the latest independent advice.

    Be bold now or risk missing zero greenhouse emissions target, state told

    He said the government’s first task should be to “sell the prosperous growth vision” of a decarbonised economy, one which would deliver jobs, regional growth, valuable exports and some of the lowest electricity prices in the world.

    Does ‘zero’ mean zero to these people or is it some rubbery figure without any real meaning? What does net zero mean? To reach zero emissions, you have to end everything, literally everything, as everything that we do creates CO2.

  9. stackja

    Federal Budget: Struggling Aussies to get $125 for power bills
    Annika Smethurst, National political editor, The Sunday Telegraph
    March 30, 2019 11:00pm
    Subscriber only

    Almost a million Victorians will receive cash handouts in Tuesday’s Budget to help struggling families cover the cost of soaring power bills.

    The Sunday Herald Sun can reveal the one-off Energy Assistance Payment of $75 for singles and $125 for couples will be deposited into the bank accounts of veterans, carers, single parents, aged pensioners and people receiving the disability support pension, before July.

    About 3.9 million of Australia’s most vulnerable people will receive the cash boost, including 585,359 Victorians receiving the age pension, more than 50,000 single parents across the state and 69,445 carers.

  10. Rossini

    stackja
    #2975496, posted on March 31, 2019 at 12:19 pm
    Stupid forken Liberals……….what a waste of my money.
    No way are these money wasting pricks going to get my vote!

  11. DaveR

    You dont need complicated economic theory to explain why increased renewables are causing higher power prices.

    Wind and solar power costs over $100/kwH when fully costed, including necessary network upgrades, and before any subsidies are applied. Add that to coal-fired power at $6-8kWh including capital depreciation, but before taxes/levies are added, and you get the picture.

    These simple facts, which Morrison/Frydenberg are incapable of telling the Australian people, are all you need to know.

  12. RobK

    The EU in its glory has https://ec.europa.eu/energy/en/topics/infrastructure/projects-common-interest . The following highlights the thinking. The article has an active link to 69 pages of PCI (projects of common interest) including lots of HV-DC links for wind farms, pumped hydro & compressed air storage, gas pipes, CO2 pipes from UK & Holland to store in Norway!(quite an earner i assume)…theres more, much more including a line from Greece to Israel !
    Sample of intro:

    Examples of PCIs and their benefits

    Further examples of PCIs and their benefits to local communities, society and the wider economy are presented in detail, and as fact sheets, in the section “Examples of Projects of Common Interest and their benefits”.

    The Commission regularly updates its PCI viewer map, a transparency platform that provides more information about the PCIs including their geographic information, implementation plan, the benefits they bring to the Member States and the local communities and the Union financial support. 

    /energy/en/files/3rdpcijpg3rdpci.jpg

    The PCI lists

    Every two years since 2013, the European Commission draw up a new list of PCIs. On 24 November 2017 the Commission published, as part of the third state of the energy union report, its third list of PCIs, which contains 173 projects; 106 electricity transmission and storage, 4 smart grid deployment, 53 gas, 6 oil, 4 cross-border carbon dioxide network.

    The third Union list of Projects of Common Interest is accompanied by a technical document  providing more information on each individual project on its location, the type and technology employed the implementation status and the commissioning dates. 

    Before and during the implementation of PCIs, comprehensive impact assessments and public consultation processes are organised with a wide range of stakeholders, especially citizens and NGOs. The results of the public consultations are available here:  

    2019 Consultation on the list of candidate Projects of Common Interest for CO2 networks2019 Consultation on the list of candidate Projects of Common Interest for smart grids2019 Consultation on the list of candidate Projects of Common Interest in gas2018 Consultation on the list of candidate Projects of Common Interest in electricity infrastructure2017 Public consultation on the 3rd list of proposed PCIs in energy infrastructure and additional projects in oil and smart grids and cross-border carbon dioxide transport (CO2 networks)2014-2015 Public consultation on the 2nd list of proposed PCIs in energy infrastructure in the field of smart gridsand additional projects in oil, gas and electricity2012 First public consultation on potential PCIs (May-June), second consultation on potential PCIs (June- October)

    No one does it better than the EU. (Sarc)
    I know we have a similar list. Most of the costs incurred are a direct result of renewables.

  13. RobK

    DaveR,
    You are on the right track but the hosting cost of renewables ramps up as penetration increases…and of course the value of intermittent supply goes from not much really” to “even less”.

  14. NB

    #Frank Walker from National Tiles: Indeed, and Bill Gates is supporting it, and so is the US government. It is a gamechanger, and should (but probably won’t) be a federal election issue. Liberal Democrats support it (https://www.ldp.org.au/energy).
    From the USA Office of Nuclear Energy at https://www.energy.gov/ne/articles/5-nuclear-storylines-watch-2019 :

    President Donald Trump signed new legislation back in September to eliminate some of the financial and technological barriers standing in the way of nuclear innovation.
    He’s also expected to sign the Nuclear Energy Innovation and Modernization Act, which already passed both houses. The bill aims to reform the NRC fee structure and directs the agency to develop a streamlined licensing process for advanced reactor designs.
    Other pending legislation includes the Nuclear Energy Leadership Act (NELA), which focuses on authorizing long-term power purchase agreements for nuclear power. NELA also calls for new advanced reactor demonstration projects and the development of a HALEU fuel supply chain.

  15. Cynic of Ayr

    Stackja
    The Sunday Herald Sun can reveal the one-off Energy Assistance Payment of $75 for singles and $125 for couples will be deposited into the bank accounts of veterans, carers, single parents, aged pensioners and people receiving the disability support pension, before July.
    $2.40 a week.
    My power bill says I spend about $400.00 a quarter. $1600.00 a year. It’s more likely than not to be more than that. My power bill a few years ago, was less then $200 a quarter. So, it’s doubled.
    And, I am supposedly to be sooooo grateful for $125 towards my $1600, that I will give Morrison’s mob my vote? Does he really think that?
    As I am bludging on the Old Age Pension and a few Shekels from my Super, the Queensland Government itself, gives me $88 a quarter. Morrison is only going to give me $31! The piker!
    (There must be immense derision for “low cost renewables” states like SA!)
    If I vote Conservative in Queensland, the Sheilas running the State might get the shits with me, and take their 88 bucks back. Simple maths says what’s the best alternative, as far as power hand-outs go.
    Mind you, the Sheilas have the re-newables bug bad – one is chronically ill with it – so it’s only a matter of time before $88 won’t buy much power.

  16. RobK

    A bit I missed in the above quote:

    Electricity interconnection targets

    To achieve its climate and energy goals, Europe needs to improve cross-border electricity interconnections. Reliable connections with neighboring countries also lower the risk of electricity blackouts, reduce the need to build new power plants, and make it easier to manage variable renewable power sources like solar and wind.

    I

  17. Dr Fred Lenin

    If an unreliable power source needs a full duplicate system to ensure continuity of supply and you have to have two systems how can it be cheaper? . Now if you close the unreliable system and improve the 24/7 system that has to make the power cheaper ,truly cheaper.
    Surely even a politician can understand this ? Or are our career politicans bought and paid for by the international carpetbaggers ? Allegations of corruption in politics/ . Surely not .

  18. RobK

    Im all for nuclear power where appropriate but we are starting from the back of the pack. No time to waste but in the right areas, coal is cheaper.

  19. Mark M

    Diminishing returns for QLD solar
    The big implication of the duck curve in electricity pricing is that those investing in solar may experience diminishing returns.
    More solar means lower and lower daytime electricity prices.
    Thus, we may reach a point where electricity prices are so low during the day, that further investment in solar can no longer be justified.

    The video below shows the full evolution of QLD wholesale electricity prices for the top quartile over the last decade.

    Queensland solar is booming and pushing down daytime electricity prices

    https://reneweconomy.com.au/queensland-solar-is-booming-and-pushing-down-daytime-electricity-prices-87209/

  20. NB

    I’m pretty interested in thorium and even LENR.

    Skunk Works development is pretty interesting too:

    https://en.wikipedia.org/wiki/Lockheed_Martin_Compact_Fusion_Reactor

    They were granted a patent so in theory it is sound and they can profit off the production.

  21. Nuclear schmuclear. We have hundreds of years worth of coal under the ground.
    Inevitably, at some time in the future mankind will have developed energy technologies we can’t even dream about today. When that happens, that coal in the ground will be worth less than sand.
    Use the stuff while it has value. If other countries go big on nuclear, coal will be even cheaper.

    Use it or lose it.

  22. Roger

    Federal Budget: Struggling Aussies to get $125 for power bills

    Modern government:

    Create a problem, then throw money at it.

    And creating expensive energy in an energy resource rich country like Australia is quite an achievement.

    We are governed by idiots who will be remembered only as object lessons in incompetence.

  23. mem

    Mark M
    #2975616, posted on March 31, 2019 at 1:57 pm
    Mark M you left out the last three sentences of this article. Here they are;
    “There is a solution to this problem of course, and that is energy storage. Combining solar with storage allows energy to be shifted to more valuable times of the day, thereby increasing revenue for investors.

    For anyone building QLD solar projects, the question is not if you should add storage, but when.”
    So is the author flogging large scale battery storage or just fantasizing? As Pauline would say, please explain.

  24. Testing one two three.
    My comments keep getting deep sixed.

  25. Davefromweewaa

    It’s pretty simple.

    The more free electricity we get from wind and solar the more we pay for power.

    We’ve seen enough, haven’t we?
    Demanding more renewables is like sending the third and fourth waves of Light Horsemen into the Turkish rifles when you’ve already seen what happened to the first two!

  26. Ben

    We have contradictory policy, not complementary policy, in the power system.

    1. Incentivise rooftop PV and batteries – less use of the grid
    2. Incentivise solar and wind farms – accommodated by building more grid

    2018 AEMO submission to WA parliamentary inquiry – daytime solar will eventually generate more than demand – if this happens they will have to disconnect large regions of the city to prevent total system outage.

    AEMO bid stack – Highest cost generator sets the wholesale price, any time there is less than 100% wind/solar on the grid, the wind/solar price is irrelevant. This is shown quantitatively in the AEMO QED reports.

    More intermittent sources drives more network investment. The network cost is recouped from customers, so network cost must go up. There is no ceiling on network cost.

    The only way to freeze power costs is to freeze network investment. This means halting all new intermittent sources that are not adjacent to an existing substation. Reducing network cost can only come by first freezing new investment and then writing down the value of the asset.

    The only way to reduce generator costs, within the current market rules, is to prevent AEMO having to call on an expensive marginal generator. So either lower the cost of marginal generation (gas/hydro), or build more low cost generation (coal) so there is more than required baseload.

    There would be some value in rule changes so that generators are paid what they are bid, instead of all generators receiving the marginal price.

  27. Herodotus

    I’m thinking of going bush, and having a big fuel stove with a wet back, plus any other off-grid stuff that works as it should. That’s where it belongs, not in bulk mainstream applications.

  28. Nob

    Herodotus:
    And a diesel gennie.

  29. Nob

    Someone, I forget who, in the oil industry used to say:

    “If you eliminated all taxes and subsidies from oil and renewables, then oil would have to be $2000/bbl before renewables could compete”

    For a while the greenies thought that would happen, but fracking changed all that and we haven’t even scratched the surface of deep water. That’s why they hate those two so much.

  30. Aynsley Kellow

    The Shellenberger article (note: 2018) is excellent, but he is not familiar with the most expensive electricity net of tax. South Australia takes that prize, as Denmark and Germany are more expensive only because they are heavily taxed.
    But note what they and California have that the AEMO does not: interconnection to a diverse network that can provide back up. We are all alone in Eastern Australia. And don’t give me Snowy 2.0 – pumped storage hydro consumes 20-30% of the energy it stores.
    And it’s not just journalists spruiking the myth that renewables are cheaper by ignoring the integration costs – there are plenty of academics in leading universities peddling that snake oil.
    I had a piece in Quadrant last year, and another on the ALP policy coming soon.

  31. Aynsley Kellow

    The Shellenberger article (note: 2018) is excellent, but he is not familiar with the most expensive electricity net of tax. South Australia takes that prize, as Denmark and Germany are more expensive only because they are heavily taxed.
    But note what they and California have that the AEMO does not: interconnection to a diverse network that can provide back up. We are all alone in Eastern Australia. And don’t give me Snowy 2.0 – pumped storage hydro consumes 20-30% of the energy it stores.
    And it’s not just journalists spruiking the myth that renewables are cheaper by ignoring the integration costs – there are plenty of academics in leading universities peddling that snake oil.

  32. CameronH

    “By reporting on the declining costs of solar panels and wind turbines but not on how they increase electricity prices, journalists are — intentionally or unintentionally — misleading policymakers and the public about those two technologies”.
    I wondered where the Australian Politicians got their stupid ideas from.

  33. Rafe Champion

    The media?
    Their children?
    The New Class of left progressive career bureaucrats who proliferated in Canberra after WW2 while Nugget Coombs was the trusted advisor to five or six prime ministers.

  34. Nuclear schmuclear. We have hundreds of years worth of coal under the ground.

    We have thousands of years worth of fissile nuclear, the stone age didn’t end because we ran out of rocks.

    We have virtually unlimited fusile material.

    Wouldn’t taking an oak stake to Paul Erhlich’s Population Bomb in the heart for good be just great?

  35. Nob

    So use the coal and gas while you’re going through the punishment process of approval and permits to build nuclear.

    Which will take fucking years.

    Australia is incredibly fortunate with reserves of coal, gas, uranium, seafood/fish, agricultural land – all of which are being locked up in deference to destructive green fanatics .

    Not to mention layer upon layer of greedy, lazy, permitocracy leeches.

    Our very own Licence Raj.
    https://en.wikipedia.org/wiki/Licence_Raj
    How dare we laugh at India.

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