Wind and Solar are Crushing Fossil Fuels

[ERD50]

Originally Posted by ERD50 View Post
Adding wind/solar is a positive in many ways, but it could be debated as to whether it makes economic sense to push it now, or wait for it to get better or (lots of questions if you think about it).
-ERD50

I'm not sure you arrive at a point where it ever makes economic sense without pushing it first. ...

See, I said it could be debated!

I actually agree with all you posted, but I knew if I stated it unequivocally one way or the other, it would get challenged from one side or the other, and I was really trying to stay more focused on whatever it was the OP was getting at (and I would appreciate to hear back from him on that - that article could be taken in many different directions, and it has).

And I do think that some sort of 'push' is needed to credit the reduced health issues that solar/wind have over coal especially, and to a lesser extent NG. Since those health costs don't show up on our bill (probably the best way to do it IMO), something should be done to credit solar/wind for that benefit.

The flip side, as my linked article points out - at higher levels of solar/wind, it gets more expensive. You either waste it or require $ (and probably dangerous) storage, and storage will waste some in the conversions.

-ERD50

 

[Dash man]

The nuclear and fossil fuel industry provide 93% and have at max, 100,000 workers in that industry.
.

You may want to recheck your numbers. Exxon Mobil alone had over 75,000 employees. If you're talking only those directly involved in petroleum/gas extraction, it's about 178,000 employees for the industry in the US.

http://www.bls.gov/iag/tgs/iag211.htm#workforce


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[Gone4Good]

Thanks to a little-discussed phenomenon known as "value deflation," the electricity generated by solar panels gets less and less valuable as more panels come online. ...

The trouble comes when you keep adding more and more solar panels to a given grid. As that happens, the wholesale price of electricity keeps falling during sunny hours. And each additional solar panel becomes that much less economically valuable.

I don't think this is a huge problem which becomes clear once you dive into how our power markets work.

For the large parts of the country where power generation is still regulated as a monopoly business there's no issue whatsoever. If you want a solar plant, you build a solar plant. You can then add the cost of construction to your utility ratebase where you earn an allowed return on that investment. As a regulated monopoly, you simply request power prices that allow you to earn your return. The price of power on the wholesale market doesn't even factor into the equation.

In parts of the country where power generation has been deregulated, they've already separated out the markets into various components. One of those is for energy (what you get paid for producing). And one is for capacity (what you get paid for being able to produce). It's the second part where you earn your return on captial.

Producers bid into the capacity market to stand ready to produce. The capacity payments provide your return on investment for the physical plant. When it comes time to produce energy for the real time market, you bid in a price that is governed by your marginal cost. Solar power plants bid in zero. Fossil plants bid in their fuel cost, and so on.

If the energy market clears at zero, the fossil plants don't run and they just get their capacity payment. If the fossil plants do run, they get a capacity plus energy payment that compensates them for their marginal costs of running the plant.

 

[Music Lover]

Those costs come in the form of pollution that producers can dump into the air for free. And because they can dump their waste for free, the price they can charge for their product is lower than the true cost of production. In that sense, free dumping permits are a huge subsidy to fossil fuel burning technology.

If fossil fuel companies had to pay to dump their emissions, their prices would be higher and they'd look a lot less competitive versus "clean" alternatives.

It's easy to cherry pick the negatives, but what about all the positives that you ignored?

Modern societies using fossil fuels have saved many times more lives than the alternative scenario where they are not used. Just one example...modern medicine would not exist without fossil fuels that provide cheap and reliable energy. The more modern a society is, the longer the life expectancy of the people becomes.

No one in a third world country posts on an early retirement forum unless they have retired there from a first world country that owes its existence in great part due to the benefits of fossil fuels.

If you get rid of heating fuel and the forests of the world will disappear in less than a year when people cut down trees to heat their homes.

If you get rid of motor vehicle engines then society is reduced to subsistence farming where a good portion of the food grown is used to feed working livestock.

 

[Gone4Good]

It's easy to cherry pick the negatives, but what about all the positives that you ignored?

I'm not cherry picking negatives. I'm simply talking about market economics.

The positive you mention are all represented on the demand side of the market. People demand electricity for all the good reasons you mention.

But supplying that demand isn't free. Producers need to charge for things like fuel, and labor, and physical plant so they charge a price. The price that matches demand with supply determines how much electricity is produced and consumed.

Now what happens if for some reason the costs of production aren't fully borne by either producers or customers of electricity but by some third party? In that case the producers can charge less to generate electricity because their costs are lower. And because prices are lower people are able to buy more electricity.

So we end up producing and consuming more than we would if the full costs of production were priced in. That also means that the costs borne by that third party are higher than they otherwise would be because there's no market mechanism to keep them in check.

Also, if an alternative producer wanted to enter that market but wasn't able to offload some of their costs on a third party in the same way, they'd be at a significant disadvantage.

This is all pretty straight forward economics. And has no political leaning one way or another.

Whether or not you believe burning fossil fuels creates such external costs is where the politics comes in.

 

[Music Lover]

Whether or not you believe burning fossil fuels creates such external costs is where the politics comes in.

The market and govt regulations are putting a price on the costs...emission controls now mean cars are dozens or hundreds of times cleaner than those built decades ago. Pollution regulations are stricter, rivers and lakes are cleaner (when is the last time a river caught fire?), people are recycling, using less, buying "greener" products, etc. Everyone one of those steps costs money either in higher taxes or higher product cost and the majority of society has accepted those costs.

However, right or wrong, there will always be those who don't think the steps go far enough.

 

[travelover]

..........
However, right or wrong, there will always be those who don't think the steps go far enough.

Yes, and there will always be those who never thought any steps were necessary in the first place.

 

[Totoro]

The flip side, as my linked article points out - at higher levels of solar/wind, it gets more expensive. You either waste it or require $ (and probably dangerous) storage, and storage will waste some in the conversions. -ERD50

True that. So many levels of 'break-even'. Just as a rough indication (my situation) where you need to be on a system levelized cost to break even with alternatives.

Retail level without 2nd order effects (say, below 10% wind/solar and/or easy buffering available like dams): around 20 cents per kwh (includes tax).
Wholesale without 2nd order effects: 10 cents per kwh
Break-even wholesale with limited 2nd order effects: 6 cents.
Break-even wholesale with 2nd order effects: all the way down to 0.

And that's only one axis. Then you have subsidies, location (sunny/windy) and interconnection.

Best place to have cheap solar/wind seems to be India for example. You are not displacing current capacity (in many areas there still is nothing), intermittency is no issue (hey, you had nothing before right?) and you have lots of sunshine.

Worst place, dunno. Alaska? or maybe in China next to the three Gorges dam.

It seems that current prices can reach 8 cents/kwh and costs keep going down (for industry-scale). Scale and experience is beautiful. And the way China and India are going the crushing will continue.

According to the article costs drop 25% with each doubling, and doubling happens every two years. In ten years that means we'll be seeing 2 cents/kwh installation costs. Incredible.

 

[scrinch]

The concept of externalities was brought home to me when my son was an infant. We lived near a busy road in a country where lead had not been eliminated from gasoline yet. When we went to the US for the summer, we had our routine physicals and found that our baby had dangerously high blood lead. We eventually eliminated paint as the potential source of the lead, and were left with auto exhaust as the only remaining possibility. Our son and every other infant that lived near a busy road in that country were bearing the external cost of that leaded gasoline.

Externalities can seem like made-up abstractions until somebody else's sh!t rolls downhill into your yard and you get to bear the consequences!

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[ERD50]

I don't think this is a huge problem which becomes clear once you dive into how our power markets work. ....

I'm not saying it is a huge problem, it's hard to ferret out the scale of it, especially in an unknown future.

I'm just pointing out the likely effects of large amounts of wind/solar. I don't see how your analysis changes anything in the end. If I build a LOT of solar, and can no longer get peak prices for my kWhrs, that solar looses some of it economic benefit to the end consumer (whether it is 'charged' to the fossil plants or to solar).

You can squeeze that balloon any way you choose, overall it will mean increased costs to the consumer (and/or taxpayer if subsidies need to be included), relative to using the same numbers from a lower level of solar build out. It just doesn't scale quite the same.

It might still be the right thing to do. Some solar being wasted might be an OK price to pay for the overall health benefits. I'm not trying to come to any conclusions, I'm just saying it is an effect, and some of the claims about solar pricing compared to coal might be a bit exaggerated when you get to these levels.

-ERD50

 

[Gone4Good]

The concept of externalities was brought home to me when my son was an infant. We lived near a busy road in a country where lead had not been eliminated from gasoline yet. When we went to the US for the summer, we had our routine physicals and found that our baby had dangerously high blood lead. We eventually eliminated paint as the potential source of the lead, and were left with auto exhaust as the only remaining possibility. Our son and every other infant that lived near a busy road in that country were bearing the external cost of that leaded gasoline.

Externalities can seem like made-up abstractions until somebody else's sh!t rolls downhill into your yard and you get to bear the consequences!

Yup. And the fight to remove lead from gasoline was epic . . . like all such fights tend to be, regardless of how obviously necessary they seem after the fact.

 

[pb4uski]

I'm not cherry picking negatives. I'm simply talking about market economics. ...

Au contraire... it was the best stretch to make a point (aka cherry pick that I have ever seen).. using that silly logic most manufactured products are cheaper because they don't pay for any emissions that they generate.

 

[Gone4Good]

Au contraire... it was the best stretch to make a point (aka cherry pick that I have ever seen).. using that silly logic most manufactured products are cheaper because they don't pay for any emissions that they generate.

If those emissions generate costs that don't show up in any price, that's exactly right. How could it not be?

 

[haha]

The concept of externalities was brought home to me when my son was an infant. We lived near a busy road in a country where lead had not been eliminated from gasoline yet. When we went to the US for the summer, we had our routine physicals and found that our baby had dangerously high blood lead. We eventually eliminated paint as the potential source of the lead, and were left with auto exhaust as the only remaining possibility. Our son and every other infant that lived near a busy road in that country were bearing the external cost of that leaded gasoline.

Externalities can seem like made-up abstractions until somebody else's sh!t rolls downhill into your yard and you get to bear the consequences!

Sent from my XT1254 using Tapatalk

I hope your Son made out OK.

This was a frightening possibility.

Ha

 

[Gone4Good]

If I build a LOT of solar, and can no longer get peak prices for my kWhrs, that solar looses some of it economic benefit to the end consumer (whether it is 'charged' to the fossil plants or to solar).

It's probably worth backing up for a minute. I partly misunderstood the argument the researchers were making in your link.

I'd summarize their argument this way: It currently costs far more per KW to build a solar plant than a fossil plant of the same size. Some of that higher capital cost is recovered through higher margins on power sales because solar plants have zero fuel costs. But as you add more solar plants, those margins compress meaning that solar plants recover less of their higher capital costs all else being equal.

And I agree with that. Essentially it's a long way of saying that it currently costs more to build a solar plant than it does to build a different kind of plant. That's well known.

But the costs of building solar plants are falling rapidly. So it's not right to frame this as some kind of static impediment to solar integration. As the capital costs of solar plants come down, so does this effect.

And if solar can get to a level where it's price per KW of installed capacity is roughly equivalent to that of a fossil fuel plant, this issue goes away completely. If not, then solar will remain a more expensive alternative - no question about it.

 

[ERD50]

...
I'd summarize their argument this way: It currently costs far more per KW to build a solar plant than a fossil plant of the same size. Some of that higher capital cost is recovered through higher margins on power sales because solar plants have zero fuel costs. But as you add more solar plants, those margins compress meaning that solar plants recover less of their higher capital costs all else being equal.

And I agree with that. Essentially it's a long way of saying that it currently costs more to build a solar plant than it does to build a different kind of plant. That's well known.

But the costs of building solar plants are falling rapidly. So it's not right to frame this as some kind of static impediment to solar integration. As the capital costs of solar plants come down, so does this effect.

And if solar can get to a level where it's price per KW of installed capacity is roughly equivalent to that of a fossil fuel plant, this issue goes away completely.

I'm not sure about the absolute comparisons, as you say, they will change over time anyhow. The only point that I'm trying to reinforce here, is that the math shifts as we build LOTs of solar/wind. It can't be simply extrapolated from the paybacks at the lower % levels.

Until we have storage or lots of flexible demand shifting, it seems it will always have an effect. How big is hard to say, but not zero.

I don't agree (in pure economic terms, ignoring the health costs for now) that the issue goes away when solar capacity cost is ~ equivalent to fossil fuel. An intermittent source of power is not worth the same as power that can can run 24/7, and in the case of NG peakers, ramp up and down quickly on command.

I also think that some are overestimating declines in the price of solar. Most of the recent decline comes from the panels themselves. You still have the mounting frames, installation labor, wiring, inverters, permits, etc. The article I linked talks about some of this, like using robot installers, etc (but there goes the 'green jobs' argument!). But I'd guess that most of those costs will not be on the same decline curve as the panels themselves.

I also wonder if we shouldn't be waiting to install solar? If the price is coming down so fast, does it make sense to wait? Let the other countries buy the expensive 'early-er adopter' stuff? Yes, you'd be delaying the health benefits - it's not just an economic argument.

BTW, until we get to that higher level of solar, I'd bet we aren't displacing hardly any coal at all. Solar comes near the peak demand, the NG peakers will be fired up, and solar will displace those first. It's still fossil fuel, but NG is far cleaner than coal, and somewhat lower CO2 as well.

-ERD50

 

[nash031]

You may want to recheck your numbers. Exxon Mobil alone had over 75,000 employees. If you're talking only those directly involved in petroleum/gas extraction, it's about 178,000 employees for the industry in the US.

I could be wrong, but I think the quoted numbers were for electricity generation in the US. The general topic of the thread (though unstated) is about electricity rather than "energy", a nuanced difference but a difference nonetheless. When the EIA quotes their numbers, they talk about "energy" which includes gas for cars, etc., and electricity. Currently wind, solar, and hydro are providing a very small portion of the overall "energy" consumption in the US, but ~13% of electricity consumption. Summarized, electrical consumption accounts for about 40% of total energy consumption in the US. This adds weight to the argument that alternative energy isn't replacing fossil fuel any time soon.

But the costs of building solar plants are falling rapidly. So it's not right to frame this as some kind of static impediment to solar integration. As the capital costs of solar plants come down, so does this effect.

And if solar can get to a level where it's price per KW of installed capacity is roughly equivalent to that of a fossil fuel plant, this issue goes away completely. If not, then solar will remain a more expensive alternative - no question about it.

The biggest issue with solar is not necessarily cost, it's capacity.

If the US wants to get serious about getting off of oil, gas, and coal for its electrical generation, nuclear is the way to go. It safely, cleanly, and relatively cheaply provides sufficient capacity to replace fossil fuels right now, but the stigma is overwhelming.

 

[explanade]

The biggest externality of oil is the defense spending to maintain fleets and forces which can conduct extended and large-scale military operations in the Persian Gulf and other flash spots which could disrupt the supply of oil.


Nuclear, aside from the waste problems, is not economically viable without federal loan guarantees. They're building new plants but they're not cheap.

And talk about externalities. A Three-Mile Island or Fukushima once every two or three decades. Lets amortize those costs in and see if it's still "relatively cheap."

 

[ERD50]

The biggest externality of oil is the defense spending to maintain fleets and forces which can conduct extended and large-scale military operations in the Persian Gulf and other flash spots which could disrupt the supply of oil. ...

Yes, but how much less oil would we need to be using before we would make a major reduction in forces there? A fleet and forces "which can conduct extended and large-scale military operations in the Persian Gulf and other flash spots" isn't going to scale down by 20%~40% if our share of the Persian Gulf oil flow drops by 20%~40%, etc.

And for wind and solar to replace much oil, we'd need to be converted to a fleet of BEVs, then you still have long haul trucks, trains, aircraft, etc.

Nuclear, aside from the waste problems, is not economically viable without federal loan guarantees. They're building new plants but they're not cheap.

And talk about externalities. A Three-Mile Island or Fukushima once every two or three decades. Lets amortize those costs in and see if it's still "relatively cheap."

It probably would be. Compared to the deaths from coal mining, and coal pollution, it could look very safe indeed. Even rooftop solar is very costly in lives lost and injuries, compared to the amount of energy energy produced. And the biggest power plant disaster was a hydroelectric dam in China,

https://en.wikipedia.org/wiki/Banqiao_Dam

... approximately 26,000 people died from flooding and another 145,000 died during subsequent epidemics and famine. In addition, about 5,960,000 buildings collapsed, and 11 million residents were affected. Unofficial estimates of the number of people killed by the disaster have run as high as 230,000 people.

Even if you include Chernobyl (which you shouldn't - that was a weapons grade plutonium production machine, posing as a power plant), nuclear doesn't come close to the problems these other sources have.

edit/add: Regarding Fukushima...

No deaths followed short term radiation exposure,[194] though there were a number of deaths in the evacuation of the nearby population,[195] while 15,884 died (as of 10 February 2014[196]) due to the earthquake and tsunami. ...

... an estimated increase of only 15 in the number of female thyroid cancer cases (and approximately five male cases). As the five-year non-survival rate for thyroid cancer is 4.2% and falling rapidly (halving each decade),[210] it is more likely than not that the number of eventual deaths will be zero.

And on the high side of the estimates...

According to a linear no-threshold model (LNT model), the accident would most likely cause 130 cancer deaths.

130 deaths maybe, versus 26,000 and another 145,000?


-ERD50

 

[Winemaker]

You may want to recheck your numbers. Exxon Mobil alone had over 75,000 employees. If you're talking only those directly involved in petroleum/gas extraction, it's about 178,000 employees for the industry in the US.

Industries at a Glance: Oil and Gas Extraction: NAICS 211


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I should have said coal power, and that number has been reduced to below 45,000 in the last few years, according to Coal Age.

 

[nash031]

Nuclear, aside from the waste problems, is not economically viable without federal loan guarantees. They're building new plants but they're not cheap.

And talk about externalities. A Three-Mile Island or Fukushima once every two or three decades. Lets amortize those costs in and see if it's still "relatively cheap."

Federal loan guarantees? Sounds a lot like renewables. Nuclear plant costs are largely front end.

Second part is a perfect example of the fear and ignorance discussion about nuclear power.

Good documentary on nuclear was on CNN a couple years ago which is germane: Pandora's Promise. From an environmental activist who once protested nuclear power but changed his mind. About an hour. Good, accurate. You should watch.

 

[explanade]

So let's see if you relocate near a nuclear plat or waste disposal site.

 

[nash031]

I would have no problem with it. In fact, I live less than eight miles from up to six nuclear reactors at any given time. Most people in San Diego live closer than that and they aren't even aware of it. I've spent six years operating nuclear plants. I'm not afraid of stuff that's not worth being afraid of. YMMV.

http://blogs.scientificamerican.com/guest-blog/radiation-levels-explained-an-exposure-infographic/

 

[Texas Proud]

The biggest externality of oil is the defense spending to maintain fleets and forces which can conduct extended and large-scale military operations in the Persian Gulf and other flash spots which could disrupt the supply of oil.


Nuclear, aside from the waste problems, is not economically viable without federal loan guarantees. They're building new plants but they're not cheap.

And talk about externalities. A Three-Mile Island or Fukushima once every two or three decades. Lets amortize those costs in and see if it's still "relatively cheap."

I think it is foolish to think that if we did not need to import oil that the government would stop spending on the military complex....

I think there might be a slow reduction over time, but not any major 'peace dividend'....

 

[nash031]

I think it is foolish to think that if we did not need to import oil that the government would stop spending on the military complex....

I think there might be a slow reduction over time, but not any major 'peace dividend'....

We are already strategically shifting away from the Gulf and towards China and the Pacific. Spending right along as normal...