In the last post, we discovered that, in attempting to get all or most of their electric power from "renewables," the residents of Gapa Island, South Korea had constructed a system that was able to supply only 42% of their power from renewables, yet had costs which, if allocated to them through their electricity bills, would lead to monthly bills of $1100 or more per household. That $1100 is approximately ten times the average monthly electricity bills paid by Americans. There are lessons here to be applied to much of the nonsense that you read about the economics of various forms of energy. A good deal of that nonsense comes from official government sources.
The problem, of course, is the intermittency of the wind and solar power. Because of intermittency, the usual metrics used to compare costs of different forms of energy just don't make sense when applied to wind and solar, at least if wind and solar are to become principal sources of energy. The usual metrics for comparing costs of various forms of energy are either dollars per megawatt (of generating capacity) or of cents per kilowatt hour (of energy supplied). Those metrics make sense for comparing against each other the various forms of energy generation that work all the time as needed; but the same metrics do not make sense at all for making a comparison between, on the one hand, forms of energy that work when needed, as against, on the other hand, sources that only work intermittently and cannot be called upon when needed. The reason is that when intermittent sources like wind and solar are involved on a large scale, you can't build a working system using just these sources. Instead, building a working system relying principally on wind and solar requires constructing large amounts of additional generation capacity (to cover conditions of light wind for wind systems, or cloudiness for solar systems), plus constructing additional backup capacity from conventional fossil fuel sources (to cover times when the wind is calm or the sun not shining at all), plus having yet additional storage capacity in the form of batteries or something else. These additional requirements hugely increase the overall costs of a working system, but are almost always omitted by renewable energy advocates from discussions of comparative costs.
For a base for comparison, consider the current situation of New York State, and compare it to what the Gapa Islanders in South Korea have created. According to our Independent System Operator here, in 2015 we New Yorkers had 39,015 MW of generating capacity, against a peak usage of 33,567 MW. That left a cushion of about 5,500 MW, or about 17% of peak demand. Wind capacity was 1,746 MW -- so, the total wind capacity was just a minority part of the 5,500 MW of excess capacity. We never actually needed any of the wind power, so if a given day was calm, no big deal. With wind power at about 4.5% of total capacity, basically a rounding error, the system works acceptably with a 17% capacity cushion.
Now compare that to Gapa Island. In their desperate effort to get most of their power from wind and solar, they built a system of wind turbines and solar panels with a capacity not 117% of peak usage, but 300%. That massive additional capacity would cover them for days of light wind and/or heavy clouds. But of course, there also could be times of no wind at all (aka, calm) and no sun at all (aka, night), so they also had to acquire backup diesel generators to supply the entire peak demand of the community yet again, presumably also with a cushion of around 15 - 20%. So they ended up acquiring generating capacity not of 117% of peak usage like we have in New York, but 417% of peak usage. And of course, in that price, batteries are not included! They also had to buy about a third of a Tesla's worth of batteries per family, to have some eight hours of backup capacity -- which still was not nearly enough battery capacity to obviate the need for the diesel generators. All of this to get up to 42% of electricity generation from wind and solar. Building four times the capacity you need (instead of 1.17 times), plus buying the massive batteries is what gets you to an electricity bill of $1100 per month instead of $110.
After considering this comparison, you can now look with a critical eye at some of the baloney about energy costs that you will see out there from promoters of renewable energy. The game is always to compare only cost per MW capacity, or per KWh generated, without ever mentioning that if you want a system where wind and solar are more than a few percent, you can't just build a system of comparable capacity to your functioning fossil fuel system; instead, you will need to build triple the capacity for starters, plus you will also need full fossil fuel backup capacity, plus you must acquire enormous batteries.
So let us consider how renewable energy advocates and government sources treat these issues. To begin, here is a February 2015 piece from energyinnovation.org titled "Comparing The Costs Of Renewable And Conventional Energy Sources." They use a late-2014 study by Lazard on what they call the "levelized cost of energy," a concept that includes capital cost, operations and maintenance, and fuel. (Notice anything missing?) And the results?
Onshore wind has the lowest average levelized cost in this analysis at $59 per megawatt-hour, and utility-scale photovoltaic plants weren’t far behind at $79. By comparison, the lowest cost conventional technologies were gas combined cycle technologies, averaging $74 per megawatt-hour, and coal plants, averaging $109.
Wind is the cheapest! As you had undoubtedly suspected, there is not a word in the piece about the problems of trying to make a system that works all the time out of nothing but wind and solar; nor is there any mention of the cost of things like additional spare capacity, or backup generators, or massive batteries, that you will need if you want to have a predominantly wind/solar system that actually works.
Next, try this one from windustry.org on the cost of wind generating capacity:
The costs for a utility scale wind turbine range from about $1.3 million to $2.2 million per MW of nameplate capacity installed. Most of the commercial-scale turbines installed today are 2 MW in size and cost roughly $3-$4 million installed.
Coal and gas plants cost in the range of $1 - 3 million per MW of generating capacity. So wind sounds rather competitive, doesn't it? It does until you understand what they are leaving out.
At its website, the American Wind Energy Association has a chart comparing the cost of generation from various sources. They choose a metric they call "Levelized Cost of Energy ($/MWh)." In their chart, onshore wind looks competitive on this metric with combined-cycle natural gas, and considerably cheaper than coal or nuclear. (Solar looks ridiculously expensive in this chart, but remember, the chart comes from the AWEA.)
Why would any dope build coal or nuclear? You'll never find out from these guys!
Are the official government sources any better? The answer is, not really. A couple of weeks ago the government's Energy Information Administration came out with its big annual report on comparative costs of generating electricity by various means. The title is "Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2016." As indicated, the report compares the alternative means of generating electricity by two measures, "levelized cost" and "levelized avoided cost," which are slightly different, but not for these purposes. Basically, both measures compare the various generation methods on a basis of cost per MW capacity, or cost per KWh production, without ever getting into the subject of how to make a full-blown system work when the generation comes predominantly from intermittent sources like solar and wind. The bottom line is that, in all the charts, onshore wind power appears about equal in cost if not cheaper than the cheapest fossil fuel alternative, which is combined cycle natural gas. Coal and nuclear get barely any mention at all in the whole report. To the government's very slight credit, they do include this brief caveat in the introduction:
Since load must be balanced on a continuous basis, units whose output can be varied to follow demand (dispatchable technologies) generally have more value to a system than less flexible units (non-dispatchable technologies), or those whose operation is tied to the availability of an intermittent resource. The LCOE values for dispatchable and nondispatchable technologies are listed separately in the tables, because caution should be used when comparing them to one another.
While we appreciate the caveat, it would be nice if you would tell us how much difference this dispatchable/non-dispatchable thing makes quantitatively. So, guys, if we want to have a system made up predominantly of the "non-dispatchable" sort of sources like wind and solar, how much additional will it cost for the extra capacity and the backup and the batteries to get ourselves to a fully-functioning 24/7 system? Sorry, but the government is just not going to be troubled to make that kind of inconvenient calculation. They have elaborate and complicated and sophisticated models and calculations to inform you that the Levelized Cost of Energy for a conventional combined-cycle natural gas-fired power plant expected to come online in 2022 is $56.40 per MWh, while the LCOE for an "advanced" combined-cycle natural gas-fired power plant coming online in the same year is $55.80 per MWh, and the LCOE for a wind-turbine system coming online in the same year is $50.90 per MWh. Wow, the wind system is the cheapest! And by a very-precise $4.70 per MWh! But this business of "dispatchable" versus "non-dispatchable" -- how much difference does that make? Is it 2%, or 5%? Or, if we try to make a system predominantly out of wind and solar that actually works for everybody 24/7, will we be increasing costs by an entire order of magnitude, a factor of 10 or more? Sorry, they can't be bothered to give you any quantitative information about that. If you want to find out, you'll just have to read some obscure Korean news source, or maybe the Manhattan Contrarian.