ENERGY INDUSTRY SPOTLIGHT:
A CONTRARIAN VIEW ON THE COST-EFFECTIVENESS OF RENEWABLE ENERGY...
In the interest of discerning the truth, amidst a prevailing propaganda narrative on given topics, I present "the other side of the story" about the alleged narrative that renewal energy (wind and solar) are cheaper than fossil fuel sources like coal and natural gas in this post....
The 2017 Trump Dept. of Energy Staff Report to the Secretary on Electricity
Markets and Reliability, commissioned under Secretary Rick Perry during the
Trump administration, provides several key reasons why variable renewable
energy (VRE) sources like wind and solar are not considered competitive with
fossil fuel-based energy (such as coal and natural gas). The report emphasizes
that while VRE has seen cost reductions and growth, this is largely driven by
subsidies and policies that distort markets, and inherent technical limitations
make VRE reliant on fossil fuels for reliable grid operation. Below is a
structured summary of the main arguments from the report.
1. Intermittency and
Variability
- Wind
and solar generation depends on weather conditions (e.g., wind speed or
sunlight), leading to fluctuating and unpredictable output. This results
in low capacity factors (e.g., wind typically 25-41%, far below fossil
plants' steady baseload performance).
- Unlike
fossil fuels, which provide consistent, dispatchable power, VRE creates
challenges like the "duck curve" (sharp ramps in net load
demand, midday oversupply, and evening shortfalls), over-generation,
curtailments, and risks during high-penetration scenarios (e.g., 10-60%
VRE share).
- This
intermittency necessitates backup from flexible fossil resources (e.g.,
natural gas combined-cycle plants) for balancing, ramping, and essential
reliability services like frequency and voltage support, increasing
overall system complexity and costs.
2. Reliability and Resilience Shortcomings
- VRE is
non-synchronous (inverter-based), reducing grid inertia and heightening
risks of instability, frequency deviations, and blackouts (e.g.,
references to events like South Australia's 2016 blackout or ERCOT's low
wind output periods).
- Fossil
fuels offer inherent advantages, such as onsite fuel storage (e.g., coal
stockpiles or natural gas pipelines), making them more resilient to severe
weather or supply disruptions. VRE lacks this fuel assurance and is
location-specific, often requiring remote siting that adds transmission
challenges.
- High
VRE penetration can lead to capacity deficiencies and operational risks,
as noted in NERC assessments integrated into the report, without the
steady baseload that fossils provide.
3. Higher System and Integration Costs
- While
VRE has near-zero marginal costs and declining capital costs (e.g., solar
PV dropped 60-70% since 2009), these are offset by high integration
expenses, including expanded transmission lines (e.g., 24,000 miles added
in recent years), grid modernization, storage needs, and increased
reserves.
- VRE
forces more cycling of fossil plants (starting/stopping to compensate for
variability), raising maintenance costs ($1.50–$4.80/MWh for gas, higher
for coal) and reducing plant lifespans.
- Levelized
cost of energy (LCOE) comparisons show regional disadvantages for VRE,
especially when factoring in full system costs; fossil fuels like natural
gas are often lower-cost in key areas due to shale abundance and easier
siting near demand centers.
4. Dependence on Subsidies and Market Distortions
- VRE
growth (e.g., 60% since 2000) is heavily subsidized through federal
incentives like the Production Tax Credit (PTC) for wind and Investment
Tax Credit (ITC) for solar, plus state Renewable Portfolio Standards (RPS)
covering 55% of U.S. electricity sales and mandatory purchases under
PURPA.
- These
subsidies suppress wholesale prices (sometimes to negative levels, e.g.,
-$22/MWh bids), displace fossil generation, and cause revenue shortfalls
for baseload plants, leading to premature retirements of coal and nuclear
facilities.
- Without
these distortions, VRE would not be economically viable in competitive
markets, as it shifts costs to consumers (e.g., RPS adds ~$12/MWh or 1.3%
to retail bills) and undermines fuel diversity. Fossil fuels, by contrast,
compete on merit without equivalent mandates, benefiting from low natural
gas prices rather than policy favoritism.
|
Aspect
|
VRE Drawbacks
|
Fossil Fuel Advantages
|
Report Implications
|
|
Output Reliability
|
Variable, weather-dependent, low capacity factors
|
Steady baseload, dispatchable
|
VRE requires fossil backups, raising total costs
|
|
Grid Impacts
|
Intermittency causes ramps, curtailments, instability
|
Provides inertia, frequency support, resilience
|
High VRE risks blackouts without fossil integration
|
|
Economic Factors
|
Subsidy-reliant, high integration/transmission costs
|
Lower LCOE in many regions, no policy distortions
|
Subsidies mask VRE's true uncompetitiveness
|
|
Market Effects
|
Price suppression, revenue loss for others
|
Viable in flat demand environment
|
Policies accelerate fossil retirements, harming diversity
|
The report concludes that while VRE can hedge against fossil
fuel price volatility, its deployment often increases overall supply costs and
reliance on natural gas, without delivering the affordability and reliability
of a fossil-dominant system. It recommends policy reforms to value baseload
attributes and reduce distortions favoring VRE.
Sources: energy.gov and Grok AI
