Renewable energy is not cost effective
Renewable energies in their current supply are either not cost effective without heavy government subsidies, use tremendous amounts of land, or they harm the environment in some way. (Quora.com)
Calculating the cost of electricity from renewable energy sources is quite difficult. It depends on the fuel used, the cost of capital (power plants take years to build and last for decades), how much of the time a plant operates, and whether it generates power at times of peak demand. In measuring the costs economists use “levelised costs”(the net present value of all costs – capital and operating – of a generating unit over its life cycle, divided by the number of megawatt-hours of electricity it is expected to supply). What levelised costing doesn’t take into account is the issue of intermittency – wind power isn’t generated on a calm day, or solar power at night, resulting in the need for conventional power plants to be kept on standby.
Electricity demand varies during the day in ways that the supply from wind and solar generation may not match, so even if renewable forms of energy have the same levelised cost as conventional ones, the value of the power they produce may be lower.
Another way to measure the costs is through a ‘cost-benefit analysis’ which looks at the benefits of renewable energy including the value of the fuel that would have been used if coal or gas-fired plants had produced the same amount of electricity and the amount of carbon-dioxide emissions that they avoid. According to this calculation, wind and solar power appear to be far more expensive than if calculated on the basis of levelised costs.
To determine the overall cost or benefit, the cost of the fossil-fuel plants that need to continue to be on stand-by for the intermittency problem, needs to be factored in. For example, solar farms run at only about 15% of capacity, so they can replace even less. Seven solar plants or four wind farms would be needed to produce the same amount of electricity over time as a similar-sized coal-fired plant. And all that extra solar and wind capacity is expensive.
In Europe, rather than seeking to increase the availability of low cost electricity, governments enforce scarcity by manipulating the factors influencing electricity prices such as “regulatory structures—including taxes and other user fees, investment in renewable energy technologies, and the mix and cost of fuels.”
In the EU governments interfere with electricity markets, and enforce the use of inferior electricity sources such as wind and solar, resulting in subsidies, taxes, feed-in tariffs, materials and labour, forcing the consumer to pay the ultimate costs. Rather than seeking to increase the availability of low cost electricity, governments enforce scarcity by manipulating the factors influencing electricity prices such as regulatory structures—including taxes and other user fees, investment in renewable energy technologies, and the mix and cost of fuels. In Germany for example, “taxes and levies account for about half of retail electricity prices, [and] transmission system operators charge residential consumers a renewable energy levy that is used to subsidise certain renewable generation facilities.” (Alex Epstein) This is in addition to policies which penalise coal and nuclear electricity generators.
Fossil Fuel energy costs do not factor in all the ‘hidden’ costs
“Investing in clean energy is not only good for the economic growth, it is good for people. The unfortunate reality is that those in the poorest countries are often the most vulnerable to climate change — whether from rising seas that threaten homes and water supplies or droughts that drive up food prices. This is the human cost of fossil fuels that often goes unmentioned in balance sheets and gross domestic product statistics.”
If the full cost of fossil fuel generation (including climate impact) were included then the costs would be comparable.
“Typically, the ones who claim that wind and solar will bring trouble to the grid are the old players, who failed to take renewable energy seriously and over-invested in fossil fuel capacities instead. Renewable energy is now eating their profits and making their old business models out-of-date” (Greenpeace.de)
“Those who argue that wind is expensive and unnecessary are quite simply wrong. Because Ireland has such a good wind energy resource, we can get cheap clean electricity from it. Making comparisons with other countries about wind effectiveness is not always valid. Ireland has a uniquely strong resource. We have one of the lowest support regimes and wind is not raising electricity prices.”(Sustainable Energy Authority of Ireland 2014)
Ireland is highly dependent on imported fossil fuels – for 89 per cent of its energy, spending €6.5 billion per year on imports – just over half of this on transport. In the past five years renewable energy has saved over €1 billion in fossil fuel imports; has reduced CO2 emissions by 12 million tonnes and has not added to consumers’ bills. The potential for wind and other provides the opportunity for greater energy independence, reducing carbon footprint, national competiveness leading to greater control over energy prices.
Growing our use of renewable energy is also vital for our national competitiveness, giving us greater control over our energy prices. “Less reliance on fossil fuels gives us greater certainty on our energy prices, rather than leaving us at the mercy of international commodity price rises. It also helps attract foreign investment, as more global companies seek access to clean energy as part of their location decisions.” (SEAI 2014)
The costs of some renewable energy inputs such as Photovoltaic solar panels have halved in price since 2008 and the capital cost of a solar-power plant—of which panels account for slightly under half—fell by 22 percent between 2010 and 2013. In a few sunny places, solar power is providing electricity to the grid as cheaply as conventional coal- or gas-fired power plants.
As the large utilities’ fossil and nuclear plants become more expensive and alternatives become cheaper, savvy consumers are looking to decrease their dependence on the utilities’ power supply. To cope, the utilities are trying to decouple their increasing costs from the amount of electricity they sell, further increasing the cost advantages of renewables and other alternatives. Renewables, with zero-marginal-costs, helped push down wholesale prices to 8-year lows in 2013.
Most sources of electricity, including coal, natural gas, and nuclear are and have historically been subsidized with both implicit and explicit subsidies, including the same types of tax credits afforded to wind and solar. For example:
Explicit subsidies: Nuclear receives a Production Tax Credit, similar to Wind. Natural Gas gets access to the Oil and Gas Exploration & Development Expensing subsidy.
Implicit subsidies through the tax payer for example in the US, subsidises cover the costs of catastrophic insurance for nuclear plants, because there is no way their owners could afford to clean up after a Fukushima-style disaster. And, of course, the ultimate implicit subsidy – the cost of environmental damage due to pollution and CO2 production, for which we all pay and will continue to pay for generations.
Also hidden costs such as bonus payouts to CEOs of the top 5 oil companies estimated at US$1tn (£650bn or €888bn) for fossil fuel exploration and extraction over nine years, reflecting the confidence of top oil companies that demand will remain high for decades to come.
The combined 2014 upstream (Upstream operations deal primarily with the exploration stages of the oil and gas industry, with upstream firms taking the first steps to first locate, test and drill for oil and gas. Later, once reserves are proven, upstream firms will extract any oil and gas from the reserve) capital spending bill for the big five is three and a half times the sum devoted to research and development by the world’s five biggest-spending drug firms. It is also equivalent to more than 14% of the combined stock market value of Exxon Mobil, Shell, Chevron, Total and BP.
Currently, renewables are more expensive than fossil fuels. BUT, this is changing rapidly. There are various types of renewables – onshore wind is the most cost competitive and offshore wind is heading that way but will likely remain more expensive; the large scale solar power costs are rapidly reducing, hydro power – marine, tidal stream, dams, run-of-river – are currently more expensive but some large-scale projects such as the Severn Barrage in the UK are competitive.
Given the interest in the private sector for renewable energy – it must be big business, with giants like Wal-Mart, Google and General Electric that have been increasing in clean energy investments. Billionaire Warrant Buffett recently spent US$5.6 billion for a renewable energy company in Nevada and a US$2.4 billion investment in a wind farm in California. Many oil companies are involved in the development of more reliable renewable energy technologies. Already for example, BP has become one of the world’s leading providers of solar energy through its BP Solar division. Dong Energy and EDP have built up balanced energy portfolios which include higher shares of renewables. Their renewable assets are making more profits than their thermal ones.
Fossil fuel companies are benefitting from global subsidies of US$5.3tn (£3.4tn) a year, equivalent to US$10m a minute every day. This subsidy estimated for 2015 is greater than the total health spending of all the world’s governments and 6.5% of global GDP. The vast sum is largely due to polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change.
“This very important analysis shatters the myth that fossil fuels are cheap by showing just how huge their real costs are. There is no justification for these enormous subsidies for fossil fuels, which distort markets and damages economies, particularly in poorer countries… A more complete estimate of the costs due to climate change would show the implicit subsidies for fossil fuels are much bigger even than this report suggests.” (IMF 2015)
The need for subsidies for renewable energy –$120bn a year – would disappear if fossil fuel prices reflected the full cost of their impacts.
Renewable energy utilises too much land, meaning problems in scalability and storage.
A problem with solar and wind energy is the sheer scale of land that is required to obtain as much energy as even a small coal fire power plant can produce. Storing renewable energy more effectively and inexpensive energy from wind or solar could become much more viable than they are currently. However right now, no cost effective forms of energy storage exist, and are not foreseen.
The area of productive land required to provide for one Australian is over 7 hectares per person. The US figure is closer to 12 hectares. However, the amount of productive land per person on the planet is about 1.3 hectares and by the time we reach 9 billion it will be close to 0.8 hectares. In other words Australians have a footprint about 10 times greater than all could share.
“Renewables are so much less energy dense than conventional generation, meaning so much more land is required. The British economist David McKay estimated that to meet the UK’s electricity needs from offshore wind would require 44,000 3MW turbines in a 4km wide band around the entire 3,000km coastline of the country. And if the wind stops, well...” (Ted Trainer)
The best option is to use electricity to pump water up into dams, then generate with this later. This works well, but the capacity is very limited. World hydro generating capacity is about 7 – 10% of electricity demand, so there would often be times when it could not come anywhere near topping up supply. Hydroelectric power is cost effective and does not suffer from intermittency, but have been linked to impacting on the ecosystems in which they are installed and affecting settlements and livelihoods.
Very large scale production of renewable energy, especially via solar thermal and PV farms located at the most favourable regions, will involve long distance transmission. European supply from solar thermal fields will probably have to be via several thousand kilometre long HVDC (high-voltage, direct current) lines from North Africa and the Middle East. Expected power losses from long distance plus local distribution are predicted to be around 15 percent. This makes it different than coal, natural gas, and nuclear, and in some senses worse. It means that it can’t supply 100 percent of our needs, and intermittency needs to be factored into any electricity system design. An intelligently designed energy system using very basic “smart grid” technology could support easily up to 25 percent production from intermittent renewables without significant strain on resources.
Many renewable technologies are scalable, and perceived problems regarding land, noise and animal welfare can be overcome.
Many renewable technologies are very scalable. The much hyped DeserTec project pointed to a new model for electricity generation for Europe with massive PV arrays in North Africa. Difficult, expensive… but do-able.
All of the scalability problems are surmountable. Doing so requires a new, far more complex, energy system with new technologies and new policy tools.
“The really fun bit will come when electric vehicles and demand-side-management become a mainstream reality. Finally, we would have the beginnings of a sustainable energy system.”
Land use: The land used for renewable energy projects, like wind farms, can still be used for farming and cattle grazing. International experience has shown that livestock are completely unaffected by the presence of wind farms and will often graze right up to the base of wind turbines.
Noise: Studies have shown that noise complaints, especially those related to wind farms, are often unrelated to actual noise. In most cases it was found that people were actually opposed to the farms on aesthetic grounds – which would be the same with coal or nuclear plants. It was also found that ‘noise’ complaints dropped off rapidly when local communities derived income from the renewable energy projects in question.
Birds and bats: A common argument against wind farms is that they kill birds and bats. However, if environmental impact assessments are conducted and migratory and local bird population patterns are assessed before construction, this is avoided completely. It is vital that these assessments are made to ensure the safety of birds and bats, as with any development project
Demand is increasing globally
The total world energy demand is for about 400 quadrillion British Thermal Units (BTUs) annually. One ‘BTU’ is about the energy and heat generated by a match. Oil, coal and natural gas supply about 350 quadrillion BTUs. Oil provides most of this, around 41 percent of the world’s total energy supplies (164 quadrillion BTUs). Coal provides 24 percent (96 quadrillion BTUs), and natural gas provides the remaining 22 percent (88 quadrillion BTUs).
By the year 2020, world energy consumption is projected to increase by around 50 percent – an additional 207 quadrillion BTUs. As outlined in previous points, renewable energies would not be able to meet this increasing demand.
Demand is decreasing in significant parts of the world, for example the European Union
Total and peak electricity demand in the European Union started to slow in the 1990s, and have been falling since 2007 (with the exception of in 2009). Total demand in the EU-27 fell by around 2.5% from 2007 to 2012. Demand also fell in several large national markets: by 7.5% in the UK, 4.3% in Italy, 3.4% in Spain and 3.2% in Germany. In the first 11 months of 2013, demand fell by a further 2.6% in Spain and 3.5% in Italy (where Enel, the country’s major electricity producer, reported an even larger drop in its nine-month report); in the first nine months of 2013, demand in Germany fell by1.1 percent.
Europe today has about twice as much installed generation capacity as peak demand would warrant.
The Clean Air Act of the late 1950s means that today a building stays the same colour as when new. The catalytic converter means that vehicles are cleaner than even thought possible 25 years ago. It prevents sulphurs entering the atmosphere and turns unburnt or half-burnt carbons into CO2. Why? Because CO2 is harmless. More CO2 provides more plant food and is, in effect, greening the planet.
New cars require only half the engine size to produce the same power and twice the mileage. Electric generators that 25 years ago were around 30 per cent efficient are now around 70 per cent efficient. Yet the ‘greens’ would have us adopt wind generation, solar power or electric cars, none of which can ever approach the efficiency of boiling water to achieve a 600 times expansion and thus power the world as economically as is possible to date. Green policies cause more damage.
In conclusion, it is our responsibility to advance alternative power. However, we should remember that low-cost electricity generation is crucial to the economy. It increases income and employment in all sectors, the purchasing power of the consumer, and makes exports more competitive. Renewable energy certainly can supplement conventional power, and its use will likely continue to steadily grow. Nevertheless, realistically speaking, it can’t entirely replace non-renewable fuels anytime soon.
“Eventually, the degree to which we depend on fossil fuels will have to lessen as the planet’s known supplies diminish, the difficulty and cost of tapping remaining reserves increases, and the effect of their continued use on our planet grows more dire. But shifting to new energy sources will take time which we don’t have” (NowIreland)
“The number one way to cut emissions quickly and get back to 350ppm is to stop burning dirty coal as soon as possible. Without coal, we must find a way to make cheap, renewable energy widely available in order to ensure all communities the right to develop cleanly.” (350.org 2013)
If we contemplate the finite dimension of our earth and our (over)consumption of our natural environment, the reality of extinction spreads beyond fossil fuels:
Soil quality–erosion of topsoil, depleted minerals, added salt
Fresh water–depletion of aquifers that only replenish over thousands of years
Deforestation–cutting down trees faster than they can regrow
Ore quality–depletion of high quality ores, leaving only low quality ores
Extinction of other species–as we build more structures and disturb more land, we remove habitat that other species use, or pollute it
Pollution–many types: CO2, heavy metals, noise, smog, fine particles, radiation, etc.
Arable land per person, as population continues to rise. In light of these ‘costs’ of fossil fuels, renewable energy is a solid alternative to meet the energy demands of our world.
Photo: Alternative energies by Guerito (2005) CC-BY-NC Via Flickr
Energy’s Future Today
The sun is the ultimate source of energy for our planet. Its energy is found in fossil fuels as well as all living things. Harnessing its energy holds great promise for the world’s energy needs, and it will be heavily called upon as fossil fuels are depleted.
There is a great deal of information and enthusiasm today about the development and increased production of our global energy needs from alternative energy sources. Solar energy, wind power and moving water are all traditional sources of alternative energy that are making progress. The enthusiasm everyone shares for these developments has in many ways created a sense of complacency that our future energy demands will easily be met.
Alternative energy is an interesting concept when you think about it. In our global society, it simply means energy that is produced from sources other than our primary energy supply: fossil fuels. Coal, oil and natural gas are the three kinds of fossil fuels that we have mostly depended on for our energy needs, from home heating and electricity to fuel for our automobiles and mass transportation.
The problem is fossil fuels are non-renewable. They are limited in supply and will one day be depleted. There is no escaping this conclusion. Fossil fuels formed from plants and animals that lived hundreds of millions of years ago and became buried way underneath the Earth’s surface where their remains collectively transformed into the combustible materials we use for fuel.
In fact, the earliest known fossil fuel deposits are from the Cambrian Period about 500 million years ago, way before the dinosaurs emerged onto the scene. This is when most of the major groups of animals first appeared on Earth. The later fossil fuels — which provide more substandard fuels like peat or lignite coal (soft coal) — began forming as late as five million years ago in the Pliocene Period. At our rate of consumption, these fuels cannot occur fast enough to meet our current or future energy demands.
Despite the promise of alternative energy sources — more appropriately called renewable energy, collectively they provide only about 7 percent of the world’s energy needs (Source: Energy Information Agency). This means that fossil fuels, along with nuclear energy — a controversial, non-renewable energy source — are supplying 93 percent of the world’s energy resources.
Dams are a major source of hydroelectric energy, such as the Hoover Dam on the Colorado River (pictured). While they collect the vast raw energy provided by water currents, they also create environmental hazards such as silt buildup. They are also significant barriers to fish, such as the salmon of the Pacific Northwest, which must migrate in order for the species to survive. The Hoover Dam is a major source of energy for the southwestern US. (Photo: US Bureau of Reclamation)
Nuclear energy, which is primarily generated by splitting atoms, only provides 6 percent of the world’s energy supplies. Still, nuclear energy is not likely to be a major source of world energy consumption because of public pressure and the relative dangers associated with unleashing the power of the atom. Yet, governments such as the United States see its vast potential and are placing pressure on the further exploitation of nuclear energy.
The total world energy demand is for about 400 quadrillion British Thermal Units — or BTUs — each year (Source: US Department of Energy). That’s 400,000,000,000,000,000 BTUs! A BTU is roughly equal to the energy and heat generated by a match. Oil, coal and natural gas supply nearly 88 percent of the world’s energy needs, or about 350 quadrillion BTUs. Of this amount, oil is king, providing about 41 percent of the world’s total energy supplies, or about 164 quadrillion BTUs. Coal provides 24 percent of the world’s energy, or 96 quadrillion BTUs, and natural gas provides the remaining 22 percent, or 88 quadrillion BTUs.
It’s not so much that we mine fossil fuels for our consumption any more than it is to mine salt or tap water supplies way underground. The problems occur when we destroy ecosystems while mining it and while using it. Certainly, if there were a way that fossil fuels can be mined and used in ways that do not harm our ecology, then everything will be okay… in a perfect world. What makes our world perfect is that, it really isn’t perfect according to definition. It is natural, with all things interdependent on each other to live, grow and produce. Fossil fuel mining and oil production can and has caused irreparable damage to our environment.
The Fossil Fuel Dilemma
Fossil fuels exist, and they provide a valuable service. It’s not so much that we use fossil fuels for energy that is problematic, but it’s the side effects of using them that causes all of the problems. Burning fossil fuels creates carbon dioxide, the number one greenhouse gas contributing to global warming. Combustion of these fossil fuels is considered to be the largest contributing factor to the release of greenhouse gases into the atmosphere. In the 20th century, the average temperature of Earth rose 1 degree Fahrenheit (1°F). This period saw the most prolific population growth and industrial development — which was and remains totally dependent on the use of energy — in Earth’s history.
The impact of global warming on the environment is extensive and affects many areas. In the Arctic and Antarctica, warmer temperatures are causing the ice to melt which will increase sea level and change the composition of the surrounding sea water. Rising sea levels alone can impede processes ranging from settlement, agriculture and fishing both commercially and recreationally. Air pollution is also a direct result of the use of fossil fuels, resulting in smog and the degradation of human health and plant growth.
But there are also the great dangers posed to natural ecosystems that result from collecting fossil fuels, particularly coal and oil. Oil spills have devastated ecosystems and coal mining has stripped lands of their vitality. These among others are the primary reasons to discontinue the pursuit to tap the vast oil reserves in the Arctic National Wildlife Refuge (ANWR).
Oil fossil fuels come from marine plants and animals and are found only underneath the ocean or under land that was covered by the oceans millions of years ago. This oil rig is located offshore in the Arabian Gulf. (Photo: Saudi Arabian Embassy – London)
The oil, coal and natural gas companies know these are serious problems. But until our renewable energy sources become more viable as major energy providers, the only alternative for our global population is for these companies to continue tapping into the fossil fuel reserves to meet our energy needs. And you can pretty much count on these companies being there providing energy from renewable sources when the fossil fuels are depleted. Many oil companies, for example, are involved in the development of more reliable renewable energy technologies. For example, British Petroleum Company, today known as BP, has become one of the world’s leading providers of solar energy through its BP Solar division, a business that they are planning on eclipsing their oil production business in the near future.
Future Supplies for Future Energy
Just how limited are our fossil fuel reserves? Some estimates say our fossil fuel reserves will be depleted within 50 years, while others say it will be 100-120 years. The fact is that neither one of these projections is very appealing for a global community that is so heavily dependent on fossil fuels to meet basic human needs. The bottom line: We are going to run out of fossil fuels for energy and we have no choice but to prepare for the new age of energy production since, most certainly, human demands for energy will not decrease.
Modern windmills have become very efficient at transferring the energy of wind to electricity. Wind power is an important part of the overall renewable energy sources for the future. (Photo: CORE)
Nobody really knows when the last drop of oil, lump of coal or cubic foot of natural gas will be collected from the Earth. All of it will depend on how well we manage our energy demands along with how well we can develop and use renewable energy sources.
And here is one very important factor: population growth. As the population grows upwards towards nine billion people over the next 50 years, the world’s energy demands will increase proportionately. Not only will it be important for renewable energy to keep up with the increasing population growth, but it must outpace not only these demands but begin replacing fossil fuel energy production if we are to meet future energy needs.
By the year 2020, world energy consumption is projected to increase by 50 percent, or an additional 207 quadrillion BTUs. If the global consumption of renewable energy sources remains constant, the world’s available fossil fuel reserves will be consumed in 104 years or early in the 22nd century.(Source: US Department of Energy) Clearly, renewable energy resources will play an increasingly vital role in the power generation mix over the next century.
The Ultimate Energy Sources as the Underdogs
Solar energy is having the most immediate impact on home energy needs, and is expected to provide the energy needs for one billion people by the middle of this century. Homes can be fitted with solar panels, such as the ones pictured above. (Photo: Maui Green Energy)
Sun, wind and water are perfect energy sources…depending on where you are. They are non-polluting, renewable and efficient. They are simple: all you need is sunlight, running water and/or wind. Not only do the use of renewable energy sources help reduce global carbon dioxide emissions, but they also add some much-needed flexibility to the energy resource mix by decreasing our dependence on limited reserves of fossil fuels.
Essentially, these renewable energy sources create their own energy. The object is to capture and harness their mechanical power and convert it to electricity in the most effective and productive manner possible. There’s more than enough renewable energy sources to supply all of the world’s energy needs forever; however, the challenge is to develop the capability to effectively and economically capture, store and use the energy when needed.
Take solar energy for example. The ultimate source of energy is the sun. Its energy is found in all things, including fossil fuels. Plants depend on the sun to make food, animals eat the plants, and both ended up becoming the key ingredients for fossil fuels. Without the sun, nothing on this planet would exist.
The sun also provides enough energy that can be stored for use long after the sun sets and even during extended cloudy periods. But making it available is much easier said than done. It would be cost prohibitive to make solar energy mainstream for major world consumption in the near future. The technology is pretty much ready for many business and consumer applications, but it would be way too expensive to replace the current energy infrastructure used for fossil fuel energy. Still, according to the European Photovoltaic Industry Association, solar power could provide energy for more than one billion people by 2020 and 26 percent of global energy needs by 2040.
Wind and hydroelectric power, which have been used effectively for generations, are also rapidly growing energy markets. The principle behind both is that the force of the wind and water currents are passed through turbines which convert their energy into electricity. Commercial wind energy is usually collected by wind “farms” essentially consisting of hundreds of wind turbines (windmills) spread over large plots of land.
But hydroelectric power is harnessed in several different methods. The most popular is through dams, such as the Hoover Dam on the Colorado River. Another form of hydroelectric energy is tidal power. In use since the early 1900s, tidal power stations collect the energy created by the rise and fall of the tides to convert to electricity.
Biomass energy, or energy from burning plants and other organic matter, is one of man’s earliest sources of energy. Wood was once the main source of power for heat, and it still is in many developing countries. Most people in developed countries use wood only for aesthetic purposes or secondary heating, limited mainly to fireplaces and decorative woodstoves. Roughly one to two billion people in the developing nations still use wood as their primary source of heat. It is this group that is seen being among the first to convert to solar heating and energy because there is no other existing infrastructure to hinder its development.
Perhaps the best solution to our growing energy challenges comes from The Union of Concerned Scientists: “No single solution can meet our society’s future energy needs. The solution instead will come from a family of diverse energy technologies that share a common thread — they do not deplete our natural resources or destroy our environment.”
Did You Know?
Wind energy is actually a form of solar energy. Wind is formed from the heating and cooling of the atmosphere, which causes air and air layers to rise and fall and move over each other. This movement results in wind currents.