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Question: Carbon and Benefits? Answer: Efficiency

By April 16, 2018November 6th, 2021Energy Rant
Question: Carbon and Benefits? Answer: Efficiency, Michaels Energy

“Don’t drink the Kool-Aid” and being as objective as possible are how I roll. If you feel otherwise, by all means, let me know.

Driving across Southern Minnesota recently, a billboard like the image nearby caught my eye. I thought this would be worth looking into to see what they have to say. As I expected, the paper it promotes is jaded against wind energy. But what arguments do they make? Are they legitimate?

Question: Carbon and Benefits? Answer: Efficiency, Michaels Energy

Wind is Fuel

When thinking about wind-driven power generation, it has a lot of hurdles to overcome to be cost-effective. One near the top of the list, of course, is the fact that the wind doesn’t always blow. Solutions to fill in the gaps include:

  • Redundant generating capacity in the amount of wind generation built.
  • Sprawling transmission systems to move bulk power hundreds of miles where it may be used.
  • Storage.

Nearly all the gap-filling comes from the first two bullets. Observing the land-based power generating resource in the middle of the country, we can see the greatest resource is where the head of livestock outnumber people by the thousands to one. Wind energy must be transmitted long distances to population centers, and since there is little demand for power where it is generated, the flow is mainly one-way. In other words, as weather systems move west to east, wind power doesn’t reverse flow from where it is blowing on day two to where it was blowing the day before.

Therefore, to be cost-effective, wind power needs to be less expensive than the incremental cost for always-available conventional power plants. That is, it must be cheaper than the natural gas burned in a 60% efficient combined cycle plant, or cheaper than the coal and nuclear fuel burned in 35% efficient steam power plants. Those are extremely tall hurdles to overcome. To wit,

How Did We Get Here?

Per the American Experiment paper, the rush for renewable energy began with the energy “crisis” of the 1970s. They say it wasn’t a crisis because it resulted from bad government policy.

The 1970s featured the Jimmy Carter sweater chat, construction of nuclear power plants to produce power too cheap to meter, Three Mile Island, and the first push for renewable energy.

Meanwhile, the oil shocks of the 1970s produced a boom in coal power plant construction as shown in the chart below from the Energy Information Administration. This is what really moved us off of dependence on foreign oil, at least for power generation.

The American Experiment lampoons the facts that first we needed renewable energy because of hydrocarbon fuel shortages. Now we need it because of hydrocarbon surpluses. In other words, rationalization is at hand, or put another way – I have a solution. What is the problem?

More recently, coal power plants faced expensive retrofits under MATS, for mercury and air toxics standards under the EPA. This resulted in many coal plant shutdowns. The MATS experience was used to stay the Clean Power Plan. The reason for the stay was to avoid another hyper-expensive retrofit and replacement campaign while allowing the Clean Power Plan to work its way through the courts.

The American Experiment paper laments that during the big wind buildout, Minnesota’s electricity price advantage has disappeared, from 18% to 2.5% versus the rest of the country. I will attest that their average electric cost for Minnesota is correct to about three decimal places, as I have done my own analysis of that for other reasons.

I would also add that the deregulated states have driven the average cost of electricity for the rest of the country. They have shuttered a lot of generation, but they are headed for their own crises that I will write about later.

Two things have kept a lid on energy prices during the great wind buildout: the production tax credit of 2.3 cents per kWh and plummeting natural gas prices. The production tax credit fades out over a few years for a given wind asset.

The American Experiment paper draws attention to what would have likely happened on a national scale under the clean power plan: that even if carbon is reduced in the power generation sector, overall emissions would not be reduced substantially. This is because, uh, I think I read something recently about this – cheap petrol prices and beer anchors.

Renewables plus Storage?

Consider what I wrote above – that for wind generation to be cost-effective, it has to produce power at a lower cost than the marginal generating cost for a coal, nuclear, or natural gas-fired resource. Adding a battery to that cost in the Midwest still does not get us there. Why? Because the wind blows least in the hottest month of the year: August. That is a big problem that is as predictable as the Winter Solstice.

What About Efficiency?

Again, efficiency gets no respect like wind, ethanol, solar panels, batteries, and electric go-karts. Too bad, because it is by far the most cost-effective means to reduce cost, reduce emissions, put people to work, and everything else. It is also predictable and controllable when mixed with demand response.

Jeff Ihnen

Author Jeff Ihnen

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