Opinion: Daily Journal

Accurate Accounting of Renewable Energy Costs

RALEIGH — The rhetorical case for renewable energy seems, at its core, to be this: Why rely on traditional sources that burn expensive energy and emit carbon dioxide when you can replace them with energy freely provided by nature that emits nothing?

Seems like a slam dunk. If that were truly the choice, no doubt it would be.

But unfortunately, that isn’t the choice. Not even close. Industry advocates know that, which is why they work in concert with friendly politicians and media true believers to make the choice seem that way.

Nature, economics, and simple math are their biggest obstacles. Not politics, not irrational hatred of renewable energy, not even donations from bugbear philanthropists.

The most often-discussed renewable energy sources (wind and solar) do not offer a one-for-one trade-off for traditional resources (coal, gas, nuclear). Wind and solar are far less efficient than traditional resources. It’s more of a one-third to one-fourth for one trade-off

Furthermore, wind and solar are unreliable resources — the wind doesn’t always blow, the sun doesn’t always shine, especially not in coordination with up-to-the-minute consumer energy needs.

So wind and solar energy production needs a reliable resource — traditional sources such as coal, gas, or nuclear — always cycling in the background. This means they simply cannot “replace” those resources.

Because there cannot be an independent, reliable wind or solar facility standing alone without needing backup from a traditional resource, it cannot be said that their energy costs are free nor that they emit nothing. (Well, they emit nothing if their backup is a nuclear plant).

Worse, cycling on and off is a less efficient use of the traditional resource, meaning it’s more expensive when used that way.

Also, more so for wind than solar, the facilities require great expenditures in building new transmission lines out to where the resource is plentiful, since it cannot be brought to locations where a plant would be more feasible.

Going further, because of those factors above, wind and solar require a steady, unrelenting diet of government subsidies, investment tax credits, accelerated depreciation schedules, feed-in tariffs, grants, and purchase mandates to stay afloat. All of those represent direct, indirect, and opportunity costs that resound throughout the economy.

Nevertheless, even though the renewable energy operations could not exist without them, those costs are rarely included when presenting policymakers and the voting public with the costs of wind and solar energy.

Even further, this government activity in favor of one kind of competitor in the market to the detriment of other competitors is helping put active power plants out of commission.

Comparing the highly limited cost estimates of building new renewable vs. building new traditional plants, which is already flawed as demonstrated above, avoids an even more relevant comparison: building new renewable plants vs. keeping active traditional plants that have already been built (i.e., no construction costs, just maintenance).

Putting working traditional power plants out of business and then saddling ratepayers and taxpayers with the costs of building new, otherwise redundant and overly expensive renewable power plants is a significant but unmeasured “broken-windows” cost. (You don’t enhance economic growth by breaking windows and then paying to have those windows repaired or replaced.)

State policymakers should be very hesitant to expand policies promoting renewable energy operations. If they remain entirely dependent upon government, then they will be a very costly burden to bear, year after year after year, and their lobbyists a constant, begging presence in the halls of power.

Local leaders should be particularly cautious providing their support for renewable energy projects for another reason — those projects and their promise of property tax revenue (heavily discounted, that is) are entirely dependent upon continuation of state and federal government support. Even curtailment of those policies could be enough to expose the projects’ utter infeasibility, shuttering the endeavors and turning off their artificial revenue streams.

Landowners should be careful, too. The untold costs of these projects would especially represent a Sword of Damocles over the heads of property owners and local officials.

These issues are covered in greater detail elsewhere. One hopes policymakers will look into these issues and reject the false choice set forward by industry advocates and their allies.

Jon Sanders (@jonpsanders) is Director of Regulatory Studies for the John Locke Foundation.