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