Labour’s energy plans are best described as ‘utterly puerile’. Their very own Brothers Grim – Mr Starmer and Mr Miliband – have come out with a set of ideas that would be quite at home in the pages of a fairy story.
This is clear from the off, the party’s manifesto discussing what it calls ‘the climate and nature crisis’ and the ‘opportunity for growth’ represented by ‘clean energy’, which it says will help tackle the cost of living crisis. It’s hard to know how to respond to such delusions. As NZW readers know, the ‘climate emergency’ is a superstition. And growth in renewables has, of course, been accompanied by a steady rise in electricity prices; the two moved in lockstep from 2002 to 2020, the eve of the Ukraine war. If insanity is doing the same thing again and again, and expecting different results, then the Brothers Grim need straitjackets as soon as humanly possible.
The manifesto as a whole is entirely lacking in any meaningful detail. We learn that it will create 650,000 skilled jobs. So that is an extra £25 billion or so that we need to find. And where are these people coming from? The North Sea oil and gas industry doesn’t employ anything like that many.
We are also told that Labour will “double onshore wind, triple solar power, and quadruple offshore wind by 2030”. The idea that this much capacity could be delivered in the space of six years is utterly absurd. And even the Brothers Grim believe that Harry Potter will come to his rescue, conjuring all those turbines and panels into existence with a wave of his wand, they still wouldn’t deliver a carbon-free grid – the need for some generation capacity when the wind isn’t blowing or the sun isn’t shining appears to be a problem to be swept under the carpet, with the Labour team only making vague allusions to ‘hydrogen’ and ‘carbon capture’, two technologies that are not yet off the drawing board. If the Brothers Grim are going to make them a reality by 2030, they are certainly going to need Mr Potter to come to their rescue a second time.
As with the other energy manifestos so far, Labour’s effort is a fairy tale, entirely devoid of any connection to engineering or economic realities. It is best handled with ridicule.
Many Germans regret their purchase or lease of an e-car and Germans overall are increasingly unwilling to consider them.
Citing an article published in the online Merkur.de, Blackout News reports: “Half of German e-car owners regret their purchase or lease”.
Apparently German e-car owners are disappointed due especially to “rising electricity prices”.
Recently we reported here that the German e-car industry was “a crisis headed for a catastrophe” and that sales were plummeting.
Q1 2024, EV sales declined some 14.1% compared to Q1 of 2023.
e-car targets now a fantasy
Meanwhile sales of conventional engine cars have risen strongly over the same period. According to Blackout News, the share of electric cars sold from the entire automobile mix was just 12.2 percent. and new e-car registrations in the current year are “down significantly”.
Customers overall remain wary of e-cars and no sales boost is in sight. This means Germany will fall far short of its electric car targets.
According to Renate Köcher from the Allensbach Institute for Public Opinion Research: “In the long-term trend, e-mobility has always been in the minority, but now we have reached a new low.”
Nuclear is the order that will inevitably spring from the wind and solar chaos being played out across the West. Every country that’s dialled into the grand wind and solar ‘transition’ is suffering rocketing power prices and weather-related power rationing.
Once weather-dependent wind and sunshine and weather-dependent solar exceed more than about 20% of a grid’s total generation capacity the fun and games begin.
Europeans are already ahead of the game when it comes to backtracking from their wind and solar obsessions.
The Swedes have joined the Finns in a nuclear power renaissance driven by the understanding that attempting to run on sunshine and breezes can only end in economic disaster. Last year, the Swedes ditched their impossible-to-meet 100% renewable energy target. The plan is to build 10 large-scale nuclear plants, with plans to lift their ban on uranium mining giving it access its own fuel supply, independent of Russia.
Half-witted bureaucrats (running on ideology) and opportunistic rent-seekers (running on subsidies) have all but destroyed Australia’s once affordable and reliable power delivery system, replacing it with something that can’t be described as a ‘system’, at all.
As The Australian’s Nick Cater points out below – alive to the fact that their grand wind and solar transition plans have no hope of coming to fruition – the crony capitalist class are terrified of the order promised by nuclear power. The always-on, ever-reliable power generation system that simply works, 24 hours a day, every day of the year, whatever the weather. No need for batteries. No need for back up. The very definition of order.
Nuclear power debate in Australia and transition to renewables is an omnishambles The Australian Nick Cater 25 May 2024
The Clean Energy Council describes itself as the peak body for the clean energy sector. It is not. It is a powerful, cashed-up lobby group promoting the interests of wind, water and hydro generators with a mission to kill nuclear energy stone dead in Australia.
Last month, the council launched a multimillion advertising campaign on animated digital billboards, airport lounges and lifts in prime Sydney and Melbourne locations with the message that the discussion about nuclear power was risking Australia’s future. It is merely a foretaste of a much larger campaign as the Coalition prepares to seek a mandate for removing the nuclear moratorium at the next federal election.
Opposition climate change and energy spokesman Ted O’Brien has been at pains to frame any discussion about nuclear around its place in the energy mix. Intermittent, disbursed generation technology such as wind and solar would continue to contribute to the grid. Gas also would be a crucial part of the mix, principally because of its agility to ramp up or down, compensating for the vagaries of renewable energy sources.
Yet the renewables sector has bought none of it. It regards the election of a Coalition government as an existential threat that would devalue its portfolios overnight. Implicit and explicit subsidies would be phased out. It would hasten the realisation that there was a threshold beyond which the saturation of renewables in the grid became more of a nuisance than a help and that we might already be in that territory.
“It is becoming increasingly clear that the nuclear push is designed to bring the rollout of renewables to a halt – not just temporarily, but for good,” wrote Giles Parkinson, the editor of Renew Economy, the sector’s equivalent of the China Daily.
Giles says there are fears the nuclear push will create more uncertainty for a sector already battling with bottlenecks and roadblocks in planning decisions, network capacity, connection delays, social licence and market regulations that are struggling to keep up with the transition.
At the end of the week, the announcement that the NSW government would pay Origin up to $225m to keep the Eraring Power Station operating for two years beyond its planned 2025 retirement confirmed that renewable energy had failed to deliver on its promise to provide the capacity required to survive without coal. The Victorian government has been negotiating similar extensions with EnergyAustralia, the owner of Yallourn, and AGL, which operates Loy Yong A. Climate Change and Energy Minister Chris Bowen belatedly has recognised the need for more gas in the system. The theory that the grid can operate on renewables alone in the medium term is now unambiguously discredited.
The Australian Energy Market Operator presented a dismal picture of the pace of the transition in its forecast for energy supply in the next 10 years, named somewhat optimistically as the Statement of Opportunities. AEMO said it had been advised of “numerous delays to the development and commissioning of committed and anticipated wind and solar projects”, meaning the amount of energy in the system would be lower than predicted between 2025 and 2028.
This would increase the likelihood of unserved energy events, or blackouts as most people would call them. It gets worse. The new turbines and solar panels are rolling out at a fraction of the rate Bowen anticipated 18 months ago, and they need to get connected to the grid. Building 10,000km of new transmission lines has not been quite the walk in the park the minister seemed to have expected. Planning and construction delays and community resistance are putting transmission projects way behind schedule and over budget.
There is no good news for Bowen or the sector in the AEMO report. Project EnergyConnect, the interconnection between NSW and South Australia, was regarded as the most straightforward high-voltage transmission link since it passed through sparsely populated territory. Yet construction delays mean it will not operate at full capacity until July 2027 at the earliest. That will be too late to compensate for expected shortfalls once the Torrens Island B and Osborne power stations shut. In NSW, delays to battery projects mean supply will be even tighter than expected, and Victoria will feel the pinch from constraints on interstate transmission.
Even if we accept AEMO’s optimistic claim that there are plenty of projects in the pipeline, this is hardly the fast-track transition the government promised. In October 2022, Bowen told a gathering of business leaders that meeting the government’s 82 per cent clean electricity target by 2030 would require the installation of 22,000 solar panels a day, 62 million in total, by the end of the decade. It would require a 7-megawatt wind turbine to be commissioned every 18 hours, each as high as Crown’s One Barangaroo tower in Sydney. About 10,000km of new high-voltage transmission lines would be needed to link up the vastly expanded network.
Yet investment in renewable energy is happening at a snail’s pace. Only a handful of projects have reached financial completion since Labor came to power.
Which puts the renewables sector in a weak position as it launches its campaign to fight nuclear. It claims nuclear is a distraction and an expensive white elephant that won’t be needed once renewables are in place. Yet the renewables sector is reneging on its side of the deal to provide a viable alternative to nuclear energy. The government’s road map, devised by AEMO, abandons the centralised baseload principles on which the electricity grid has operated since its conception. Instead, it proposes a highly distributed system combining wind and solar with storage.
It is a novel concept based on untried assumptions. The only countries that have come close to living the renewables-only clean electricity dream are countries such as Norway that have an abundance of hydro-electricity and the ability to build onshore wind generators in and around the Arctic Circle where they can operate for more than 40 per cent of the time, compared with figures in the mid-20s for wind projects in much of Australia.
It means the heavy upfront investment in turbines, transformers, inverters and transmission produces close to double the return of similar investments in Australia once subsidies are discounted.
The consistent message from countries with grids already operating on carbon-free energy is that nuclear energy must be part of the mix. The accompanying map of Europe illustrates the point. The countries in green are those with electricity systems that have emitted less than 100 grams of carbon dioxide equivalent per kilowatt hour of electricity consumed across the past year. Every one of them, except Iceland and Norway, uses nuclear power. Norway is powered almost entirely by hydro, with less than 3 per cent of the energy generated by biomass and wind. Iceland has the rare gift of accessible geothermal energy, contributing 28 per cent of the total mix. The rest came from hydro.
EU data shows retail electricity prices were consistently lower than the European average in these countries. For example, consumers in Sweden, Finland and Norway paid about half the cost of those in Germany, which abandoned nuclear power and invested heavily in wind and solar energy.
To counter this real-world evidence, the renewables sector leans heavily on the CSIRO’s controversial calculations in its GenCost report, which claims renewable energy is far cheaper than nuclear. GenCost’s chief limitation is that it compares the levelised cost of electricity at an individual project level, which inadequately accounts for system costs, including the costs of transmission and back-up.
This week, the CSIRO estimated that a large-scale nuclear power plant would cost at least $8.5bn to build in Australia. That figure seems credible based on the experience of Finland, where the Olkiluoto 3 reactor went online a year ago for $9.7bn.
The relevant question is not the size of the investment but whether it represents value for money and whether the owners (a private Finnish consortium) can expect a commensurate return across the life of the project.
The answer to both questions is unambiguously positive. Olkiluoto 3 can operate for 95 per cent of the time at a steady output of up to 1.6 gigawatts. It has a conservative lifetime of 60 years, but the owner is confident its life can be extended for at least 20 years beyond that and that there is a reasonable chance it will be operating at the turn of the century.
As a third-generation pressurised water reactor, it represents the first of its kind. The engineers overcame many challenges along the way, including the storage of nuclear waste, which will be packed in sealed copper capsules and buried 430m below the ground in stable rock 1.9 billion years old. Once complete, the containment tunnels will be filled with bentonite, the main ingredient in cat litter, and sealed with giant concrete plugs.
Having visited the site last week, I can confirm the tunnels are in place, testing is nearing completion, an elevator is installed and burial of waste is likely to begin in the European autumn.
Increasingly, the policy question is not whether Australia can clean the grid without it. For all its talk, the renewables sector is taking us nowhere fast.
How long can we afford to stick with a plan with uncertain potential that relies on numerous forms of new technology untested at scale? If the renewable energy sector is confident these things will work and can be delivered on budget and time, it will not fear nuclear as a competitor.
Yet the industry is well aware that the renewables-only path is precarious. The capital markets tell them so: private investors are unwilling to risk their money in renewable energy projects without compensation from the government. The Capacity Investment Scheme, in which the government guarantees a loan return, is a risk-shifting exercise, transferring uncertainty that the capital markets find intolerable to the taxpayers.
Real-time data from AEMO offers a sobering reality check. In the 24 hours that ended at 3.30pm on Thursday, the east coast grid (national electricity market) was running on 76 per cent fossil fuel and 24 per cent renewable energy, including 8 per cent hydro. If this represents an improvement on the mix when Labor came to power, it is too small to be visible to the naked eye. The Australian
In the Bermuda Triangle of electricity bills, the more cheap generators you add, the higher your electricity bills grow
The experts at the CSIRO tell us that renewables are the cheapest sources of electricity, with all their Capex calculations and their levelised maths, and yet the electricity bills set the house on fire. (It’s Russia’s fault!) Could it be that the experts accidentally forgot to analyze the system cost and that all the hourly megawatt dollars per machine don’t mean a thing?
In the race to the most expensive electricity in the world, this week the UK is the winner. Germany is handicapped by being bundled into the EU27, lumbered with all the French nukes and is therefore not in the running. Australia is missing in action, but possibly only because the price rises were too fast and too much for the Eurostat, the US DoE, and IEA to keep up with, so they gave up.
And people wonder why China is the world’s manufacturing base.
In the next graph is the “rest of the world”. After 2021 Australian electricity prices are unmarked for some reason, but officially they rose 20% two years in a row. So that cost of €210 per MWh in 2021 could easily have become €300 by 2023, putting Australians second highest in the world after the UK.*
The bottom line is that from 2008 the price of electricity in China fell from €100 down to €80 per megawatt hour. While in Australia it rose from €125 to €300 and in the UK prices rose from €150 to €360. Effectively, the price of electricity fell 20% in China at the same time as it rose 240% in Australia and the UK.
If President Xi had wanted to run a campaign to sabotage our grids, he couldn’t have done it better.
By uncanny coincidence the percentage of wind and solar power penetration on each national grid pretty much predicts the order of the price graphs the EU collated. Among this pool, the nation with the highest penetration of wind and solar power is the UK which gets 29% of its electricity from wind and solar power. Australia is second at 26%, and the EU collective third at 22%. Turkey and Brazil get 16% of their power from the unreliable generators, the USA got 15%, China 14%, Japan 11%, India 9% and Russia 1%.
Japan’s electricity is more expensive than its modest unreliable-generator-percentage would suggest, but then they have virtually no oil, gas or coal to call their own, and no interconnectors to rescue them either.
Is 20% renewables the tipping point?
The three winners of the Highest Price Electricity race are all states with renewable penetration above 20%.
The whole grid can absorb the penetration of unreliable energy up to a point, but there comes a time when adding more random energy generators is a burden too far. The system costs start to breed like Ebola, as the good generators get euthanized, storage costs get out of hand, frequency stability becomes an issue, and everyone wants their own personal interconnector. Then word spreads that the bird killing, bat destroying and whale shredding equipment is noisy, ugly and a fire risk, and before you know it, farmers need 100 times the money to make the high voltage towers bearable. It all just adds to the cost. And finally everyone realizes that the environment you were supposed to be protecting is being clubbed by a windmill, and Florence the borer is stuck in tunnel.
Smaller grids or countries without interconnectors will hit that tipping point faster. Watch this space, world. There is no nation over the border to rescue the Australian grid.
* Estimating the unlisted Australian price leap:the ACCC here found domestic retail bills jumped from $1400 annually to $2000 in NSW, and $1200 to $1600 in Victoria. (p66). In Australia the retail electricity rates now roughly average 33c per kilowatt hour, with a range of 26-45c/KWh (AUD). But that useage cost doesn’t include all the charges. As Craig Kelly points out the €250/MWh European rate is effectively 25 euro-¢/kWh. But the official “Default offer” in South Australia is $0.68 kWh (or 41 euro-¢/KWh). In NSW it is $0.53 – $0.56 kWH (32-34 euro-¢) and in Queensland it is $0.50 kWH (30 euro-¢). So Australia really is more expensive than the crazy-land EU. And while traditionally few customers paid the “default offer”, in 2023 as many as 40% of customers on flat rate plans were paying that rate, according to the ACCC (p47).
European Commission, Directorate-General for Energy, Smith, M., Jagtenberg, H., Lam, L. et al., Study on energy prices and costs – Evaluating impacts on households and industry – 2023 edition, Publications Office of the European Union, 2024, https://data.europa.eu/doi/10.2833/782494
You came here for truths and straight talk, so, here’s a doozy.”
Standing on stage at the National Press Club — being beamed live into offices and lounge rooms across the country — one of Australia’s top energy bosses was preparing to say what few in the industry will acknowledge publicly.
Jeff Dimery — CEO of Alinta Energy — looked up from his notes on the lectern and delivered the promised doozy to the audience.
“Australians will have to pay more for energy in future,” he says.
“We need to be honest about that.“
…
Yes, renewables are the “lowest cost, new form of generation”.
But building the wind and solar farms at the scale required to replace coal, together with the batteries needed to store the power, and the new network of transmission lines to distribute that power to consumers will involve tens of billions of dollars’ worth of investment.
This is a big change from previous claims that renewables would bring down near term prices.
Electricity prices predicted to fall as renewable supply increases, gas price falls
Posted Mon 21 Dec 2020 at 5:32am
Key points:
Electricity prices are expected to fall by 9 per cent over the next three years
More renewable energy production is behind the fall
Power prices in Canberra are predicted to buck the trend
Household electricity bills are expected to fall by 9 per cent over the next three years as more renewable generation joins the grid.
A new report by the Australian Energy Market Commission (AEMC) predicts all states in the National Electricity Market — NSW, Victoria, Queensland, South Australia and Tasmania — will have lower energy prices in 2023.
The residential electricity price trends report 2020, published by the advisory body today, projects the ACT will have a slight rise in electricity prices over the next three years.
…
The report says the main reason for the drop is lower gas prices and the introduction of new sources of energy generation like solar and wind.
It also says network costs and environmental costs are falling, too, although they contribute less to the overall reduction.
It is not just the ABC. The AEMO, the industry body tasked with regulating the East Coast Australian energy grid, has also frequently added to the confusion about the true cost of renewables;
Renewables push NEM electricity prices down to historical levels
23/10/2023
AEMO’s latest Quarterly Energy Dynamics report shows that wholesale electricity prices averaged $63 per megawatt hour (MWh) in the September quarter, down 41% from the June quarter ($108/MWh) and 71% ($216/MWh) from Q3 2022.
By region, South Australia recorded the highest average quarterly price at $92/MWh, followed by New South Wales ($81/MWh), Queensland ($65/MWh), Victoria ($49/MWh) and Tasmania ($29/MWh).
Total electricity supply by fuel type saw renewables (wind, grid-scale and rooftop solar, hydro and other sources) contribute 38.9% of total supply, up 4.6%, while black coal’s share fell 3.4%, primarily due to the Liddell Power station closure, and gas fell 2.3%. Brown coal’s market share increased 1%, mainly due to fewer unplanned outages.
AEMO Executive General Manager Reform Delivery, Violette Mouchaileh, said that the growing influence of renewables in the NEM was apparent in the warmer September quarter as prices returned to historical levels.
“Record renewable generation output helped push down average wholesale electricity prices by more than two-thirds, double the occurrence of zero or negative wholesale prices (19%) and reduce total emissions by 11% compared to the previous September quarter,” Ms Mouchaileh said.
“Renewables also supplied a record 70% of total energy used over a half-hour period, with rooftop solar contributing 39%, again highlighting the likely benefit from coordinating rooftop solar and home batteries.
There is no excuse for this confusing messaging about prices. Renewables were always going to be expensive. It was up to the industry oversight body to keep people informed. Does leaving out the bit about how much renewables cost seem like a reasonable effort to keep people informed?
According to the AEMO “Who we are” page, “… AEMO provides the detailed, independent planning, forecasting and modelling information and advice that drives effective and strategic decision-making, regulatory changes and investment. …”. Do articles like the fluff piece above, which somehow fails to mention that any renewable driven cost reduction is temporary, that someone has to pay for all the green infrastructure, does any of this seem like the AEMO is adequately discharging its duty to provide independent advice?
$383 billion is just under $15,000 for every man, woman and child in Australia, or $39,000 for every working person in Australia, just to pay for initial construction. All those extra transmission lines and renewable systems will have to be maintained, at a cost of billions of dollars every year in addition to the cost of maintaining existing infrastructure.
Australia’s peak demand was 31GW in 2023-24, serviced by a capacity of 55GW. According to Wikipedia, the capital cost of building new coal capacity is US $4,074 / Kw to around $1,201 / Kw for gas.
Isn’t climate change supposed to create superstorms and violent weather? If say a big hail storm comes along and wrecks a vast acreage of solar panels, as happened last year in Nebraska, well that will have to be paid for as well.
What are the alternatives to renewables?
Underinvestment in Australia’s energy infrastructure has left most of it in a decrepit state. Lets assume for a moment we have to replace it all.
55GW x 1000000 (convert to Kw) x $4074 = US $224 billion to completely replace all of Australia’s coal capacity with coal. Multiply by 1.54 to get Australian dollars, and you have $345 billion – well short of the $383 billion Energy CEO Jeff Dimery estimated for renewables. If the coal plants use brown coal, which has zero value except as fuel to be shovelled into an adjacent generator, that is a saving of $38 billion in capital costs, + the system does not incur higher transmission line maintenance charges, and a massive cost every time. We save at least $38 billion, and since coal is dispatchable, we wouldn’t have to panic every time the wind dies.
And of course there is the very real risk the $383 billion costing is a massive underestimate. A lot of rather arbitrary assumptions go into calculating such numbers, such as the battery capacity required to accomodate renewable intermittency. Extreme excursions from normal weather conditions such as season long wind droughts over large geographical regions occur often enough to be a problem.
Even when the power doesn’t completely fail, economically damaging spikes in electricity prices can devastate the finances of energy intensive businesses. No energy intensive business can afford $5000 / MWh on a regular basis.
Green energy is a bottomless money pit, always was, always will be. It is time for politicians to be honest with voters, and put a stop this colossal waste of taxpayer resources, before they burn even more money for no benefit.
Residential electricity prices jumped nearly 12% in 2023 and they are going higher. But the carbon intensity of power generation isn’t falling and low-income ratepayers are subsidizing the rich.
California’s energy woes are getting worse. According to the latest numbers from the Energy Information Administration, the state’s residential electricity prices, already among the highest in America, jumped by 3 cents per kilowatt-hour last year, an increase of 11.9%. The average California homeowner now pays 28.9 cents per kilowatt-hour for electricity, which is the third-highest price in the U.S., behind only Connecticut and Hawaii.
Unfortunately, the 2023 price increases are only a hors d’oeuvre. California’s electric rates are headed for the exosphere. As I explained last March in “California Screamin,” in 2022:
The California Public Utilities Commission unanimously approved a scheme that aims to add more than 25 gigawatts of renewables and 15 gigawatts of batteries to the state’s electric grid by 2032 at an estimated cost of $49.3 billion. In addition, the California Independent System Operator released a draft plan to upgrade the state’s transmission grid at a cost of some $30.5 billion. The combined cost of those two schemes is about $80 billion.
Given the raging inflation in utility products, that $80 billion estimate is undoubtedly too low. Whatever the ultimate price tag, the state’s aggressive alt-energy plans will inflict more economic pain on the low-income residents of a state with the dubious distinction of having the highest poverty rate in the United States.
From natural gas bans to aggressive alt-energy mandates and bans on vehicles with internal combustion engines, the Golden State provides a clear example of what not to do. While California’s lunatic energy policy decisions go back decades, the most relevant regulations began in 2008. That’s when, as McClatchy newspapers explained:
Governor Arnold Schwarzenegger signed an executive order calling on utilities to provide one-third of their power from renewable resources by 2020. “This will be the most aggressive target in the nation,” he said. Increased reliance on renewable energy conceivably could hike future rates, however, because of higher production costs and the need to upgrade transmission facilities. Schwarzenegger’s order came on the eve of today’s international summit on global climate change in Los Angeles. (Emphasis added.)
These seven charts show how California’s electricity policies have unfolded since 2008.
Chart 1
The following chart uses a graphic created by Grant Chalmers, who works in information technology at the University of Brisbane. It shows that despite the massive increases in wind and solar production, the carbon intensity of California’s electric generation isn’t falling. To be clear, total electricity use in California is falling. All-sector electricity use in the state fell 11.2% between 2008 and 2023. (Hat tip to Joe Toomey.) That reduction in power use has likely helped reduce the state’s overall CO2 emissions, which, as seen in this December 14, 2023, California Air Resources Board report, have declined since 2008. But California is nowhere near net zero, and the carbon intensity of electricity production hasn’t budged in more than a decade.
Chart 2
Meanwhile, the state’s electricity prices are exploding.
Chart 3
Chart 4
The following chart shows the latest figures from the Bureau of Labor Statistics. Although the average price of residential electricity in California is 28.9 cents per kilowatt-hour, it’s even more expensive in the state’s biggest cities.
Chart 5
A devastating February 8 report from The Public Advocates Office, estimated that rooftop solar incentives in California will cost “customers without solar an estimated $6.5 billion in 2024.” The report is astonishing for its brevity and its findings. The office, which is part of the California Public Utility Commission, concluded that the cost of solar subsidies for ratepayers who don’t have solar has nearly doubled since 2021. It explains: “The recent cost increases are driven by two main factors: (1) a surge in customers installing solar prior to the phase out of unsustainably lucrative program compensation terms, and (2) higher compensation to customers with rooftop solar for the excess energy their systems generate.” The report goes on, saying the main incentive for homeowners to install rooftop solar is a program called net energy metering which compensates those homeowners for “the electricity they generate by more than seven times its relative value to the grid.” (Emphasis added.) It continues:
The Public Advocates Office estimates Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric customers without solar will pay an additional $6.5 billion in 2024 to support the program. In 2021, the cost was approximately $3.4 billion. Our analysis estimates that in 2024, more than 15% of the average household’s electricity bill will go to subsidizing the program across all utilities if they do not have solar. The amount has trended upward in recent years: the program made up 8 to 17% of the average customer’s bill in 2022, according to a prior CPUC estimate.
On January 10, less than a month before the Public Advocates Office published its report on rooftop solar, the Legislative Analyst’s Office sent a 16-page letter to Senator Maria Elena Durazo, a Democrat from central Los Angeles, that detailed the myriad ways in which California’s climate policies — in the words of The Two Hundred for Homeownership, a non-profit group that advocates for low- and moderate-income communities — “disproportionately burden lower-income people.” The letter found that the state’s net metering policies for rooftop solar:
Have historically subsidized electricity costs for households with rooftop solar while raising them for everyone else and researchers note that NEM is one driver of high increases in residential electricity prices. The average customer without rooftop solar pays 10 percent to 20 percent on their electricity bills to subsidize rooftop solar on the homes of others. (Emphasis added.)
None of this should be surprising. I spotlighted the class divide over solar energy and the transfer of wealth from poor to rich in 2017 in the Wall Street Journal. I wrote:
According to a study done for the California Public Utility Commission, residents who have installed solar systems have household incomes 68% higher than the state average. Ashley Brown, executive director of the Harvard Electricity Policy Group, calls the proliferation of rooftop solar systems and the returns they provide to lucky people like me, “a wealth transfer from less affluent ratepayers to more affluent ones.” It is, Mr. Brown says, “Robin Hood in reverse.”
This graphic shows the change in effective solar subsidies between 2021 and 2024. Rooftop solar and net energy metering would have horrified Robin and other denizens of Sherwood Forest.
Chart 6
There’s plenty of evidence the state’s energy mandates are punishing low-income Californians. On March 10, Rob Nikolewski, a sharp-eyed reporter at the San Diego Union-Tribune, published an article that began, “Roughly one-quarter of San Diego Gas & Electric customers are still behind on their monthly bills.” He continued, saying that about 3.48 million California ratepayers had “fallen behind on their monthly payments, as of January.” He then quoted Mark Wolfe, the executive director at the National Energy Assistance Directors Association, who said the numbers in California are “alarming.” Wolfe added: “The underlying problem is energy is very expensive in California and it’s not surprising to see people owing as much as they do.”
After nearly four years, 223 episodes, and over 900,000 downloads, I am putting the Power Hungry podcast on hiatus. I have enjoyed doing the podcast and sincerely appreciate everyone who came on the show or tuned in. My colleague, Tyson Culver — who also directed and produced our new docuseries, Juice: Power, Politics & The Grid — has been a dependable podcast producer. But I’ve been stretched too thin lately. So, I’m hitting the pause button. I may come back to the podcast or I might start putting video content here on Substack. But those are decisions for another day. I look forward to having more time to focus on my speaking business and my writing here on Substack. Thanks to all of you who listened to the podcast.
Media Hits
1. Tyson and I were on the Pacific Research Institute’s podcast, Next Round, this week, discussing our docuseries. It was a good chat. Click here to listen.
2. Reporter John Moritz quoted me in a piece about the Texas grid that was published Monday in the Austin-American Statesman. John contacted me after reading my February 20, piece “Out of Transmission Revisited.” I was glad to get quoted saying, “The number of line-miles of high voltage transmission over the last few years has been declining…So these claims that we hear routinely that, ‘Oh, we’re just going to massively expand the grid.’ No, that is not going to happen.”
3. David Staples of the Edmonton Journal published an excellent piece yesterday on the backlash against alt-energy in Canada and the U.S. He quotes me and mentions our new docuseries and the Renewable Rejection Database.
If you don’t click that ♡ button, you will be required to pay the electric bill at Arnold Schwarzenegger’s mansion in Pacific Palisades. (With apologies to Doomberg.)
“California leaders know that rising prices are a huge problem. The state is now considering a plan to tie utility rates to personal income so that the rich pay more and low-income residents pay less. Costly California looms as an example of poor energy policy.”
Energy prices are skyrocketing in California. The state’s electricity, gasoline, and natural gas prices are amongst the nation’s highest and rising. Green energy policies are the primary cause for high and escalating California energy prices.
Electricity
California electricity prices increased by 98.2 percent over the last 15 years, the highest rise in the nation. No other state comes close in terms of price increases. US average electricity prices rose 30.6 percent over the same period. California power prices rose to a level that is the second highest in the nation, only lower than Hawaii. In contrast, prices in Texas have actually declined since 2008 due to a focus on retail competition and a sharp decrease in natural gas prices, more than offsetting wind and solar additions. [1]
California is the epicenter of green energy in the United States. The state established the first renewable portfolio standard in 2002, mandating that 20 percent of electricity be from renewable sources by 2017. Governor Arnold Schwarzenegger instituted a 33 percent renewable requirement by 2020. In 2018, Governor Jerry Brown signed an executive order mandating 100 percent zero-carbon electricity by 2045.
The transition from traditional power plants to renewables has been a top priority for California for the last 20 years. By the start of 2023, California’s grid contained more than 6 gigawatts(GW) of wind, 17.5 GW of utility-scale solar, and 14 GW of residential rooftop solar.
Over the last two decades, the state retired 11 coal-fired power plants and converted three other coal plants to burn biomass fuel. The San Onofre Nuclear Generating Station closed in 2013, and the Diablo Canyon Power Plant, the state’s last nuclear plant, has been scheduled for closure.
In 2022, natural gas provided 42 percent of California’s in-state electricity generation, with other sources providing: solar (27%), nuclear (8%), hydroelectric (8%), wind (7%), geothermal (6%), and biomass (2%). The state imports about one-fifth of its electricity from surrounding states.
Solar and wind generators are more expensive than traditional coal, gas, and nuclear generators. Wind and solar occupy huge amounts of land, perform poorly during winter months, and suffer from intermittent output.
Vaclav Smil’s book Power Density points out that wind and solar systems use about 100 times the land area of traditional generators to produce the same electricity output. Renewable facilities also tend to be far from population centers, requiring expensive buildouts of transmission systems. Land and transmission costs boost the price of electricity from these generators.
The intermittency of wind and solar generation has the largest cost impact. Cloudy days and nights eliminate solar output and windless days idle wind turbines. Winter solar output drops to about half the available summer output. About 90 percent of traditional coal or natural gas generators must be maintained as backup for intermittent wind and solar systems, boosting power prices.
Batteries
California leads the US in deployment of grid-scale batteries. The plan is to use batteries to store electricity when wind and solar generation is high and then release the stored power back to the grid when wind and solar output is low. Wind and solar plus battery systems are being deployed as a low-carbon alternative to coal and gas power plants.
But the use of grid-scale batteries to backup renewable generators multiplies the cost of electricity. Utility-scale solar systems cost about $1 million per megawatt (MW) of rated capacity. Grid-scale batteries with four hours of discharge duration cost about $1.5 million per megawatt of capacity. These batteries can back up solar for only about four hours.
To replace a gas-fired power plant, a battery system would need to back up a solar installation for one or more days. A battery that can back up a $1 million one-megawatt solar facility for a single day would cost about $9 million. Grid-scale batteries only have a 12-year lifetime, about one-half of the solar lifetime. Adding batteries to backup solar for a single day boosts the total capital cost by more than a factor of ten.
Gasoline
February 29 found California regular gasoline prices at $4.74 per gallon, the highest in the nation. California drivers pay 40 percent more than the national average. The state has its own blend of gasoline, and claims that the blend will emit fewer greenhouse gases when burned. Higher gasoline taxes and a shortage of local refineries also factor into the high prices.
Natural Gas
California also consistently ranks in the top 10 in natural gas prices. Prices are high because the state has long discouraged local production, importing more than 90 percent of its gas from other states. There is a also a shortage of gas storage facilities.
Green energy policies affect not only electricity and fuel prices, but also housing utility and construction costs. Many regulations aim to reduce greenhouse gas emissions from buildings. The California Air Resources Board passed a regulation outlawing new residential gas heaters by 2030. San Francisco, Los Angeles, and other cities have voted to ban gas appliances in new construction. Only electric heat pumps, water heaters, and stoves may be used. These measures further boost the cost of energy for homeowners.
Housing Costs
Housing prices are rising because of green energy mandates. The 2020 California Solar Mandate requires newly constructed homes to have solar panels and wiring for electric appliances. The California Building Standards Commission enacted standards that require electrical conduit for level two EV charging in single-family homes and parking facilities with EV chargers for multi-family homes and hotels. These additional requirements make the cost of housing less affordable for low-income residents.
Conclusion
Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric, the big California utilities, have all asked for 2024 rate increases, in part needed to bury hundreds of miles of transmission lines to reduce the threat of forest fires. Residents already pay $300-500 per month for energy. There seems to be no end in sight to rising California energy prices.
California leaders know that rising prices are a huge problem. The state is now considering a plan to tie utility rates to personal income so that the rich pay more and low-income residents pay less.
But affordable energy is clearly not as important as efforts to try to stop global warming. Costly California looms as an example of poor energy policy.
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[1] Storm Uri (February 2021) rate spikes of $10 billion or more have been paid by floating bonds and/or are in legal limbo, which would make Texas’s electricity rates higher than recorded.
Steve Goreham is a speaker on energy, the environment, and public policy and the author of the new bestselling bookGreen Breakdown: The Coming Renewable Energy Failure. His previous posts at MasterResource can be found here.
Industrial electricity use in the EU is collapsing. US policymakers “Have no excuse for not looking at Europe and learning.” Plus: screenings in Dallas, Tulsa, Fairfax, & Austin.
Port Talbot steelworks in Port Talbot, Britain. https://en.wikipedia.org/wiki/Tata_Steel_Europe#/media/File:Port_talbot_large.jpg
The headline on a February 9 Bloomberg article concisely sums up Europe’s unfolding disaster: “Germany’s days as an industrial superpower are coming to an end.” The article says, “Manufacturing output in Europe’s biggest economy has been trending downward since 2017, and the decline is accelerating as competitiveness erodes.”
But it’s not just Germany. All across Europe, industrial capacity is shrinking. Last month, Tata Steel announced it would close its last two blast furnaces in Britain by the end of this year, a move that will result “in the loss of up to 2,800 jobs at its Port Talbot steelworks in Wales.”
Europe drove itself into the ditch. Bad policy decisions, including net-zero delusions, the headlong rush to alt-energy, aggressive decarbonization mandates, and the strategic blunder of relying on Russian natural gas that’s no longer available, are driving the deindustrialization. How bad is it? Mario Loyola, a research fellow at the Heritage Foundation, wrote a sharp January 28 article in The Hill about Europe’s meltdown. According to European Commission data, industrial output in Europe “plummeted 5.8% in the 12 months ending November 2023,” he wrote. “Capital goods production was down nearly 8.7%. Investment in plants and equipment has plummeted.”
The result of all that lousy policy: staggering increases in electricity prices. Loyola notes that European electricity prices “have settled at triple their pre-pandemic levels.” Energy analyst Rupert Darwall recently reported that large businesses in Britain now pay up to five times more for juice than in 2004.
Electricity use is one of the most reliable barometers of economic vitality. Indeed, electricity is the world’s most important and fastest-growing form of energy. Economic growth drives electricity use and vice versa. Healthy economies need juice and lots of it. In ailing economies, electricity use declines. Last year, according to a new report from the International Energy Agency, global power demand grew by 2.2%. The Paris-based agency expects global electricity demand to rise by an average of 3.4% annually through 2026, and that “demand will be driven by an improving economic outlook, which will contribute to faster electricity growth both in advanced and emerging economies.”
China and India continue their torrid growth. The IEA estimates China’s electricity demand grew by a whopping 6.4% in 2023. The agency expects China’s power demand to increase by 1,400 terawatt-hours through 2026, an amount of energy that “is more than half of the EU current annual electricity consumption.” Power demand in India jumped by 7% in 2023, a slight decrease from the 8.6% growth in 2022. The IEA said, “Continued rapid economic expansion and robust demand for space cooling were the main pillars of growth” in India. And as I noted in these pages in December, the bulk of new power demand in China and India is being met by burning coal. (Power demand in the U.S. fell by 1.6% last year, a reduction the IEA blamed on milder weather, reduced manufacturing, and “strikes in the automotive industry and overall inflationary pressures.”)
The soaring growth in China and India provides a stark contrast to the situation in Europe, where electricity use declined by 3.2% last year. The IEA notes the drop in electricity use follows a 3.1% decline in 2022 and that power demand in the EU has “dropped to levels last seen two decades ago. As in 2022, weaker consumption in the industrial sector was the main factor that reduced electricity demand.” The plunge in the EU’s industrial electricity use is nothing short of stunning. In 2022, industrial power demand in the EU dropped by 5.8%. The IEA estimates it declined by another 6% in 2023.
According to the IEA, electricity demand in Germany “declined by a remarkable 4.8% in 2023…demand reduction is especially prominent in energy-intensive industry, which faced a decrease in production of 13% during the first six months of 2023.” That reduction in electricity use reflects the ongoing drop in Germany’s industrial output. This (somewhat fuzzy) chart uses a screen grab from the Bloomberg report mentioned at the top of this article.
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Figure 3
Figure 4
Figure 5
These slides and the ongoing destruction of European heavy industry bring to mind the trenchant lines that John Constable of Britain’s Renewable Energy Foundation delivers in our new five-part docuseries, Juice: Power, Politics & The Grid.
Constable, who is also the energy editor at the Global Warming Policy Foundation, delivers a stark warning. In Episode 3, he says, “I tell decision-makers in the United States to study the European example very, very carefully. I mean, you have no excuse for not looking at Europe and learning. We’ve tested this for you.”
We are taking Juice on the road. We have several screenings in the works. The screenings are free, but seating is limited. If you want to attend, please RSVP by sending a note to: hello.robertbryce (at) gmail.com. Let us know which screening you wish to attend.
This Tuesday, February 13, thanks to our friends at the Maguire Energy Institute, we will be screening two episodes at Southern Methodist University, Crum Auditorium, 6p.
February 15, thanks to our friend, Clark Wiens, we will be at the historic Circle Cinema in Tulsa, 6:30p.
February 16, thanks to Carol Conner, the indefatigable editor of the Fairfax Chief newspaper, we will be at the Gray Horse Community Center in Fairfax, 5:30p.
March 4, we will be at AFS Cinema in Austin, 6:30p.
Real gross domestic product (GDP) per person is barely growing and the OECD has projected Canada’s long-term growth (i.e. to 2060 and beyond) in GDP per capita as the worst (the worst!) among the developed countries. Capital invested in the economy per worker has been falling, as are productivity and living standards.
The situation is made worse by the Trudeau government’s fiscal, economic and environmental policies. The oil and gas industry, long the powerhouse of the resource sector, has cut its reinvestment of income in half and instead allocates more funds to buying back shares and increasing dividends. The manufacturing sectors are being hollowed out by ever-higher electricity prices in some provinces and by ever-more-stringent regulatory reviews that delay or impede new resource and infrastructure projects. The Trudeau government has proudly embraced the goal of reducing Canada’s greenhouse gas emissions to zero by 2050, completely ignoring the enormous costs of and technological barriers to that goal, and the fact that attaining it would have little impact on global emissions driven by economic development trends in Asia.
As we enter 2024, we should ponder the long list of new environment-related measures that the federal government plans to undertake this year. The rate of the carbon tax (and its evil twin, the Output Based Pricing System imposed on industry) is scheduled to rise on April 1st to $80 per tonne of carbon dioxide equivalent. Environment and Climate Change Canada plans several more regulatory changes that will adversely affect business, homeowners and consumers. The federal government probably will pass legislation to protect “nature and biodiversity” that will further harm investment and development and require financial institutions to impose onerous “net-zero” planning and reporting requirements on the firms to which they lend.
No doubt there will be other bad news events arising from the “net-zero” mandates given to publicly owned electric utilities and provincial agencies that regulate electricity and natural gas utilities.
Well-funded environmental organizations may use their influence to promote ending the use of natural gas; subsidizing electric vehicles, heat pumps and wind and solar energy; impeding the certification of all hydrocarbons-related infrastructure; and supporting lawsuits that will convert anti-economy policies into legislative requirements. They are pursuing the anti-plastics agenda with almost religious intensity. The Canadian ship of state is in danger, and there are no safe harbours in sight.
The Federal Network Agency published the latest electricity production figures on Wednesday. Federal Minister for Economic Affairs Robert Habeck was pleased and emphasized the importance of the upward trend in the use of renewable energies for the economy and the climate (Bundesnetzagentur, 03.01.2024).
In doing so, he ignores the high import of nuclear power since the shutdown of the last nuclear power plants in Germany.
Nevertheless, there are also worrying developments. Germany produced almost ten percent less electricity overall in 2023 and became a net importer of electricity for the first time since 2002. Imports increased by 63 percent year-on-year, while exports fell by 24.7 percent. This worries experts such as the FDP’s energy policy spokesman, Michael Kruse, who points to the dependence on foreign electricity in times of unreliable renewable energy sources.
Steep increase in French nuclear power imports and the challenge of high German electricity costs
Imports of French nuclear power increased by 233 percentage points compared to 2022, when many French nuclear power plants were out of service. About a quarter of imported electricity comes from nuclear power plants, while about 50 percent comes from renewables.
The low electricity production and high import quota are closely linked to the high costs of German electricity generation, especially due to the expensive LNG gas from the USA. According to Professor Christian Rehtanz of the Technical University of Dortmund, German electricity cannot be cheaper than in the USA as long as LNG gas is imported from the USA. This gas is often fracked gas and therefore harmful to the climate.
Controversy over the shutdown of nuclear power plants and the interpretation of current electricity data
The opposition has criticised the decision to shut down the remaining nuclear power plants and warned of rising electricity prices. Jens Spahn of the Christian Democratic Union (CDU) describes the policies of the governing coalition as “ideological” and “irresponsible”. The Greens, on the other hand, defend the shutdown of nuclear power plants and emphasise the high security of supply and the expansion of renewable energies.
The latest figures from the Federal Network Agency thus show that the situation is complex and can be interpreted in different ways.
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Global warming, climate change, all these things are just a dream come true for politicians. I deal with evidence and not with frightening computer models because the seeker after truth does not put his faith in any consensus. The road to the truth is long and hard, but this is the road we must follow. People who describe the unprecedented comfort and ease of modern life as a climate disaster, in my opinion have no idea what a real problem is.
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