Two years after natural gas prices spiked, resulting in a jump in coal consumption for electricity (see Figure 1), natural gas prices have plunged to inflation-adjusted record lows. The Wall Street Journal reports drillers and producers are curtailing activity as storage bulges at the seams.
Figure 1 United States Electricity Production by Source (eGRID)
Figure 2 Natural Gas Futures Prices
Price suppression is partly due to the recent mild winter and summer, which produced only a few early heat waves to stress the Southwest and West Coast grids.
Electricity Prices Decoupling from Fuel Cost
Electricity prices are rising because, as I explained in 2018, the cost of electricity generated by renewable resources must be less than the avoided marginal fuel cost for a thermal power plant – and it isn’t. That is because backup assets must always be available as renewables swing from 90% of supply to zero in 24 hours. The upshot is that electricity prices, at least on the low end, are being decoupled from fuel costs.
As a result of the above research, I was interested in digging into a RealClearWire article, Tangled Comparisons – Renewables Versus Fossil Fuels, to see how my analysis aligns. While that author bashes renewables, I try to stay on the facts and let readers decide. The author claims:
- Wind and solar electricity costs 5x more than electricity generated from fossil fuels or nuclear.
- The levelized cost of electricity (LCOE) is bogus when comparing the costs of 24/7/365 electricity between fossil and renewable sources.
- The U.S. has “wasted” $1.5 trillion on wind and solar, and for that, only a bit more than 10% comes from wind and solar.
- If a looming climate catastrophe occurs, nuclear power is the only thing that will save us.
1. Electricity Cost Comparison
Initially, I thought I couldn’t tell the legitimacy of the 5x factor on renewables compared to thermally generated electricity from coal, natural gas, or nuclear. But I already did with simple math back in the Climate Apocalypse. Solar and battery storage for 24/7 electricity costs at least $1.24 per kWh – about 10x more expensive than conventional supply.
2. LCOE is Bogus
True. See Planes, Bikes, Automobiles, and the Deceptive LCOE for reference.
3. $1.5 Trillion Wasted?
According to the most recent eGRID dataset, there are about 230 gigawatts of nameplate renewable electricity generating capacity from wind, solar, biomass, and geothermal in the United States as of 2022. See Figure 3. $1.5 trillion smeared over those 230 GW is about $6,500 per kW, roughly triple what I would have guessed. That’s a huge number.
Figure 3 Operating Renewable Generation in the United States
According to eGRID, 13% of the total comes from wind and solar energy nationwide, as shown in Figure 4.
Figure 4 United States Electricity Production Shares
4. Nuclear is the Only Serious Decarb Play
4. Nuclear is the Only Serious Decarb PlayTrue. Get serious about the climate apocalypse. The clock is ticking.
Secondary and Tertiary Effects of Renewables
In my blog post, Blistering Wind and Solar, I synthesized findings from a MISO[1] report, Renewable Integration Impact Assessment, which described that renewable electricity generation may need to be curtailed with as little as 13% of the total supply. Curtailments of wind generation mean wind turbines are shut down and locked because of excess supply and grid congestion.
What do these curtailments look like? Hundreds of wind turbines may be curtailed on breezy days in Southwest and South Central Minnesota, especially in the shoulder seasons and winter.
From a broader view, the largest wind-generating regions in the country include the Southwest Power Pool (SPP) and MISO. I found this information from the Energy Information Administration to be astounding: at less than 25% of kWh supply by wind, the average curtailment of wind resources reached 1,605 MW in 2022. Whoa! That’s the same as one large nuclear power plant and a mediocre combined cycle gas generating station not running on average 24/7/365! There is one reason electricity prices are rising on zero to minimal fuel cost, like $2 per million Btu of natural gas.
The 1.6 GW average curtailed wind capacity is roughly 1.5% of the average load in MISO and SPP, which is about 110 GW. Although wind and solar are the first to be deployed for a reverse auction in a wholesale market, they are the first to be curtailed because they are easy and inexpensive to stop and restart, unlike thermal (steam) plants, including nuclear, coal, and combined cycle natural gas plants.
This is precisely why, despite the National Resources Defense Council’s complaining, MISO uneconomically dispatches coal plants over renewable sources for a significant portion of the year. The MISO grid operator’s first priority is long-term reliability, customer cost, and CO2 emissions. Thermal power plants cannot be started and stopped like golf carts. Per the NRDC report, “cycling the coal plant’s output tends to increase maintenance costs and the risk of catastrophic equipment failures. Frequently ramping, starting up, and shutting down coal plants can cause equipment to fatigue and crack as metals and other materials expand and contract due to temperature changes.”
A Final Look
The last thing I observed was the installed capacity and capacity factor of all major grid resources, and how they changed from 2000-2022 (newest available eGRID data). The capacity is in nameplate megawatts, and the capacity factor is the electricity generated divided by the maximum the generator could produce if operated at full capacity all year.
Figure 5 Capacity and Capacity Factor
What I’m seeing is:
- A substantial increase in total capacity.
- A substantial decrease in total capacity factor of almost 13 percentage points.
- An increase in natural gas capacity almost equal to the increase in wind and solar and the decrease in coal. I.e., gas is replacing some coal, but it’s redundant primarily with renewables, as described above.
Interesting.
[1]Midcontinent Independent System Operator
