At this blog, I have generally used the tag "Government Fraud" to refer to the various intentionally deceptive data and statistics issued by our government to induce the people to support further growth and bigger budgets for the government. But in the last few weeks we have a new cool term for such intentionally deceptive information masquerading as news, namely "fake news." OK, I'll adopt the term for the time being.
As discussed in Friday's post, the people coining the term "fake news" seem to think that the big problem is a few crank websites vying for attention on social media, while at the same time they seem to be completely unaware that far and away the biggest purveyor of fake news is the government itself. The list of government-generated intentionally deceptive data and statistics is long and dishonorable. I gave a few examples in Friday's post, and further, I have argued that all of the most important government statistics are fraudulent, including prominent examples like how the poverty rate is calculated, how government spending is accounted for in GDP, and how government debt obligations are reported (failing to accrue anything for Social Security and Medicare liabilities).
A recent and extreme example of government-generated fake news is the reporting of comparative costs of various forms of energy (e.g., coal, oil, natural gas, wind, solar) in the form of so-called "levelized costs." I wrote two posts about this in August, here and here. A prime goal of the Obama administration has been to use government levers of regulations and subsidies to put the fossil fuel industry out of business and replace fossil fuel energy generation with so-called "renewables." To get public support for that plan, the government has needed a metric for comparing the costs of fossil-fuel energy versus "renewables" that will make the renewables appear much cheaper than they actually are. The "levelized cost" metric serves this function.
"Levelized cost" as used in the government reports addresses only what the next kilowatt hour of energy from this source will cost. In the case of the fossil fuel plant -- which can generally be turned on or off as needed to generate power -- that metric is a fair proxy for the cost of getting reliable electricity from a working electricity system consisting mostly of this type of source. But in the case of, for example, wind turbines, the "levelized cost" of electricity from a certain turbine gives you little to no indication of what it will cost you to get reliable electricity from a working system mostly fueled mostly by wind turbines. That's because a working electricity system fueled mostly by wind turbines requires additional massive costs that a fossil fuel system does not: huge excess capacity (perhaps 300 - 400%) to deal with conditions of light wind; gigantic batteries to store power for conditions of no wind at all, which can persist for days; extra transmission lines to bring electricity from windier areas to the rest of the country; and finally, an entire array of fossil fuel back-up plants for those occasions when the wind doesn't blow for a week and the batteries are dead.
As I reported at this post, a demonstration project by a South Korean utility to create a functioning electricity system mostly fueled by wind ended up with costs on the order of ten times the costs of the conventional system, by the time the excess capacity, storage and fossil fuel back-up were taken into account. Oh, and over the course of a full month, the experimental system only generated 42% of its electricity usage from wind.
And yet, check out the big report out from the Energy Information Agency in August. The title, "Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2016," tells you all you need to know. Look at the charts starting on page 6, and you will find that for energy sources you might be considering investing in today, wind is always reported to be the cheapest, generally about 10% less than the next cheapest which is natural gas. Coal and oil are up from there. But, you ask, if I want to have a system mostly relying on wind, how much excess capacity will I need? How much battery storage will I need? How much extra transmission capacity will I need? How much fossil fuel back-up will I need? How much will those things cost? How much will those things increase the cost of electricity? You will find no answers to those questions here. Please, this is not real news, it is fake news. They are hoping that you are not smart enough to ask the relevant questions, and that you will be deceived.
And now for the big question: Do we have any reason to think or hope that the new Trump administration can penetrate through the barrage of fake news coming out of these government agencies and start basing policy on real information? In the case of many of the issues I have been harping on over the years (e.g., poverty rate, GDP, entitlement accruals) I have not yet seen anything to indicate one way or the other. However, on the specific issue of the costs of renewable versus fossil fuel power, yes, we do have reason to hope. That reason is found in a questionnaire containing 74 questions that has been submitted by the so-called transition "landing team" at the Department of Energy. The questionnaire appeared in the Washington Post on December 9 here, and then was analyzed in detail by Willis Eschenbach at Watts Up With That on December 10 here.
Here are questions 55, 56, and 57 from the questionnaire:
55 EIA’s assessments of levelized costs for renewable technologies do not contain back-up costs for the fossil fuel technologies that are brought on-line to replace the generation when those technologies are down. Is this is a correct representation of the true levelized costs?
56 Has EIA done analysis that shows that additional back-up generation is not needed? How does EIA’s analysis compare with other analyses on this issue?
57 Renewable and solar technologies are expected to need additional transmission costs above what fossil technologies need. How has EIA represented this in the AEO forecasts? What is the magnitude of those transmission costs?
Now, I don't have any information on who the people are who put together this questionnaire, and this "landing team" seems to have preceded the naming of Rick Perry as Energy Secretary designate by quite a bit. But it is immediately evident that these people know what they are doing. Further evidence of their competence can be found in questions on other subjects, including, for example, questions about DOE's loan guarantees (these were the people who guaranteed the Solyndra loan) and questions about why DOE supports seventeen (seventeen!) different energy research laboratories. Read Eschenbach's analysis in full at the link.
The more I see from the Trump transition effort, the more I am impressed by it.