Resource Documents: Emissions (126 items)
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Author: Plummer, James; Frank, Charles; and Michaels, Robert
We compare three technologies that produce electricity in the United States: wind, solar, and combined-cycle gas turbines (CCGT). We use the 2016 electric utility database compiled by the U.S. Energy Information Administration (EIA). That database has the advantage of being based on a census of U.S. power plants rather than sampling, as well as excluding any subsidies received by the power plants.
We show the cost savings achieved when there is a shift between coal-fired generation and generation by wind, solar, or CCGTs, where costs include both capital and operating costs. The net cost reduction per tonne of CO₂ reduction is $4,340 for a shift from coal to wind, −$98,826 (a cost increase rather than a cost decrease) for a shift from coal to solar, and a $251,920 decrease for a shift from coal to CCGT.
When the net emissions from switching away from coal are considered, the net cost savings for each tonne of emissions avoided is $1.27 for a switch from coal to wind, −$44.11 (a net cost increase) for a switch from coal to solar, and a savings of $50.72 for a switch from coal to CCGT. The differentials between the savings from a switch to wind or solar and a switch to CCGT is a measure of the “dead weight economic loss involved in switching from coal to either form of “renewables” instead of switching from coal to CCGT.
This research concludes that CCGT is the only “economic” choice from the perspective of benefit-cost analysis.
- Following Joskow, we do separate analyses for peak and off-peak generation.
- This study borrows heavily from a 2014 Brookings Working Paper by Charles R. Frank, “The Net Benefits of Low and No-Carbon Electricity Technologies.” However, we use updated 2016 data.
- The basic data for this study is the annual census of electricity generation conducted by the EIA of the U.S. Department of Energy.
- One advantage of using the EIA data is that it measures the costs of electricity production on a “real resource cost basis.” That is, the data do not incorporate the large U.S. government subsidies paid to the owner/operators of U.S. wind and solar electricity plants.
- The federal subsidy to solar energy is 30% of capital cost. The federal “production tax credit” (PTC) for wind was $.023 per kWh in 2016, but has complex annual yearly inflation adjustments.
OTHER BASIC ASSUMPTIONS
- A new low-carbon (wind, solar, or CCGT) plant replaces a coal plant off-peak and a simple cycle gas turbine on-peak.
- The price of natural gas is the average price paid by electric utilities.
- The cost of capital is 7.5%.
- The emissions from a new CCGT plant are grossed up to account for fugitive from the production and transport of natural gas.
- We include “balancing and cycling costs.” These are the extra cost that electric utilities incur to accommodate the intermittent nature of wind and solar.
THE CONCEPT OF “DECARBONIZATION EFFICIENCY”
Decarbonization cost is the differential cost of producing a MW year of electricity via coal plants and three other technologies – wind, solar, and CCGTs – divided by the differential CO₂ emissions (measured in tonnes per year).
Total net cost savings in 2016 of switching from coal to …
- Wind: $4,340 per MW-year
- Solar: $98,826 per MW-year
- CCGT: $237,684 per MW-year
Tonnes of CO₂ emissions per MW-year avoided by switching from coal to …
- Wind: 3,418
- Solar: 2,241
- CCGT: 4,686
Net cost savings per tonne of emissions avoided
- Wind: $1.27
- Solar: −$44.11
- CCGT: $50.72
DEAD WEIGHT ECONOMIC LOSS …
Of a decision to switch from coal to wind instead of to CCGT:
- $49.45 per tonne of emissions avoided
Of a decision to switch from coal to solar instead of to CCGT:
- $94.83 per tonne of emissions avoided
Conclusion: Switching to either wind or solar instead of to CCGT involves a dead weight economic loss. However, the dead weight economic loss is twice as great for a switch to solar instead of a switch to wind.
A SCENARIO OF DECARBONIZATION
In recent years, U.S. CO₂ emissions have been about 5.8 billion tonnes per year.
Suppose a goal of reducing those emissions by 10% or about 580 million tonnes.
As shown before, substitution of wind for coal results in a cost savings of $1.27 per tonne of CO₂ reduction, or $0.74 billion in this decarbonization scenario.
As shown before, substitution of solar for coal results in extra costs of $44.11 per tonne of CO₂ reduction, or $25.58 billion if all the investment was in solar.
However, if all the investment were done in CCGT, then the total cost savings would be $29.42 billion. So, the cost savings are larger when all the investment is in CCGT. The differences in cost savings are the amount of “dead weight economic loss” from investing in wind or solar instead of CCGTs.
These equations could be turned around to calculate, for a given fixed outlay of costs, what would be the “foregone CO₂ emissions opportunity” from investing in wind or solar instead of CCGT.
OTHER ALLEGED “SIDE BENEFITS OR COSTS” OF RENEWABLES
Job creation. Many of the jobs created by renewables are at the installation or capital goods production stages. The inherent capital intensivity of renewables limit their job creation potential.
Infant industry learning. This was a label invented by Argentine economist Raul Prebisch to argue for tariff protection of industry in less developed countries. However, those tariffs often led to “soft industries” that became dependent on the tariffs and did not focus on increased efficiency. A higher gain results from investing in specialized R&D activity.
Siting issues. Renewables progress over time from more favorable wind and solar sites to sites that involve higher cost per kWh produced, a classic example of “diminishing economic returns.” CCGTs are smaller physical plants, which can be sited close to natural gas supply or end-use electricity customers.
BROADER ISSUES OF RENEWABLES VS. CCGTs
Should CCGT be eligible to receive federal tax credits analogous to the current federal tax subsidies to wind and solar? No. This would be doubling down on a bad federal policy. CCGT does not need subsidies. They can out compete wind and solar on their own.
The states mainly follow a policy of “renewables mandates” placed on regulated utilities. The utilities don’t resist these mandates very hard because the system of a fixed return on “utility rate base” largely eliminates the incentives to lower costs via investment in CCGTs. This pattern is a classic example of political “confusion of ends and means.” If the goal of electricity policy at the state level is reducing CO₂ emissions, then the state should not intervene to put CCGTs at a disadvantage.
James L. Plummer, President, Climate Economics Foundation
Charles R. Frank, Senior Non-resident Fellow, Brookings Institution
Robert R. Michaels, California State University Fullerton
[presented at the 35th United States Association for Energy Economics/International Association for Energy Economics Conference, November 12–15, 2017, Houston]
Author: Hayward, Steven; and Nelson, Peter
Some observers suggest that the United States can source 100 percent of its electricity from renewable sources by the year 2050, and can easily replace not only coal but also nuclear power plants and even natural gas plants with renewable energy alone. The most frequently cited analysis in support of this proposition comes from Stanford University’s Mark Jacobson, who has published a series of papers that purport to establish the feasibility of 100 percent renewable power. This is the kind of work that generates enthusiastic headlines and news stories, and becomes a rote talking point for environmental advocacy and special interest lobbies. A closer look shows the superficiality of this claim. Twenty-one prominent academic energy experts, all of whom generally support renewable energy, recently published (doi: 10.1073/pnas.1610381114) a harsh critique of Jacobson’s influential work in the Proceedings of the National Academy of Sciences, concluding that:
‘[Jacobson’s] work used invalid modeling tools, contained modeling errors, and made implausible and inadequately supported assumptions. Policy makers should treat with caution any visions of a rapid, reliable, and low-cost transition to entire energy systems that relies almost exclusively on wind, solar, and hydroelectric power. … If one reaches a new conclusion by not addressing factors considered by others, making a large set of unsupported assumptions, using simpler models that do not consider important features, and then performing an analysis that contains critical mistakes, the anomalous conclusion cannot be heralded as a new discovery. The conclusions reached by the study about the performance and cost of a system of “100% penetration of intermittent wind, water and solar for all purposes” are not supported by adequate and realistic analysis and do not provide a reliable guide to whether and at what cost such a transition might be achieved. … A policy prescription that overpromises on the benefits of relying on a narrower portfolio of technologies options could be counterproductive.’
How much more expensive and counterproductive? A recent study (doi: 10.1016/j.tej.2016.03.001) in The Electricity Journal of decarbonization through reliance on renewables in Germany, California, and Wisconsin (a state closely analogous to Minnesota in many ways) would require an investment in wind and solar power much larger than in conventional energy supplies, chiefly because the intermittency of the wind and solar power would require massive amounts of surplus capacity. A power mix in Wisconsin that retained nuclear and natural gas electricity would achieve a 15 percent greater reduction in greenhouse gas emissions than a system with 80 percent wind and solar power, and at less than half the cost. As Brick and Thernstrom note:
‘[T]he intermittency of wind and solar PV [photovoltaics] means that systems that are heavily reliant on them must be significantly larger than conventional systems; this increases their cost and capital requirements dramatically. … Efforts to promote an all- (or nearly all-) renewables future are, in effect, a commitment to building the largest electric power system possible. It might be better to start from the presumption that the smallest power system that meets our needs is likely to be the most efficient, and have the least social and environmental impact.’
The study does not attempt to estimate the land area requirements for such an extensive renewable energy system, but given the examples contained in Figure 14, they are likely to be substantial. Minnesota’s government ought to do a credible estimate of future land area needs for its renewable targets.
Author: Hayward, Steven; and Nelson, Peter
In recent years, the state of Minnesota has pursued a series of increasingly aggressive renewable energy and “clean energy” policies that cost electricity consumers billions of dollars, without achieving its ambitious environmental protection goals.
Minnesota law sets out ambitious state energy policy goals. The primary goal would have the state reduce greenhouse gas emissions 15 percent below 2005 levels by 2015, 30 percent by 2025, and 80 percent by 2050. State law incorporates a number of additional energy policy goals aimed largely at supporting these greenhouse gas reduction targets. In particular, the state’s renewable energy standard requires utilities to generate a substantial portion (25 to 30 percent) of electricity from renewable sources, mostly wind.
Historically, Minnesota enjoyed the advantage of relatively cheap electricity, with rates typically 18 percent less than the national average. However, since spending an estimated $10 billion on building wind farms and billions more on new and upgraded transmission lines, Minnesota has lost this competitive advantage with little to show for it, except higher electric bills. As electricity generation from carbon free wind approaches 20 percent of total generation, Minnesota has not experienced any appreciable reduction in greenhouse gas emissions relative to the U.S. average.
This report evaluates Minnesota’s energy policy and reaches five main findings that buttress one conclusion: Minnesota’s aspirational energy policy is a grand exercise in virtue signaling that does little to reduce either conventional pollution or greenhouse gas emissions.
Minnesota has lost its advantage on electricity pricing. Between 1990 and 2009, the retail price of electricity in Minnesota was, on average, 18.2 percent lower than the national average. However, in just seven years, this price advantage has completely disappeared. February 2017 marked the first month the average retail price of electricity in Minnesota rose above the U.S. price. (Data are available dating back to 1990.) If in the past seven years Minnesota would have maintained its historic price advantage versus the rest of the country, the state’s consumers would have paid nearly $4.4 billion less than what the actual cost of electricity turned out to be.
Minnesota’s energy policy primarily promotes wind power. Minnesota’s energy policy emphasizing renewable energy is mostly an electricity policy, which represents only about 40 percent of the state’s total energy consumption. Because Minnesota’s geography is not suitable for large-scale solar power, it aims, to date, for only modest increases in solar. As such, Minnesota’s energy policy is primarily a wind-energy policy.
Minnesota’s energy policy is failing on its own terms, as it has not achieved a significant reduction in CO2 emissions. While Minnesota was losing its advantage on electricity pricing, it did not see any significant decreases in CO2 emissions. CO2 emissions in Minnesota declined by 6.6 percent from 2005 (the peak year for CO2 emissions in both the U.S. and Minnesota) to 2014 (before starting to rise again). This decline is one-third less than the decline experienced by the nation as a whole, which saw greenhouse gas emissions drop 9.3 percent during the same time period. Looking at just emissions from the electric power sector, emissions in Minnesota dropped by slightly more than the U.S. However, since 2009, the state has made little to no progress on emissions even as electricity generation by wind increased by 92 percent.
To satisfy Minnesota’s renewable energy standard, an estimated $10 billion dollars has been spent on building wind farms and billions more on transmission. In the past five years, Minnesota utilities have reported using wind power from wind farms totaling 5,000 megawatts of nameplate capacity to meet the requirements of the state’s renewable energy standard. Based on industry cost estimates for building new generating capacity, ratepayers are committed to covering an estimated $10 billion for constructing these wind farms and billions more for the transmission needed to move this new power to market. On top of these upfront costs, ratepayers are on the hook for ongoing wind energy maintenance costs, property taxes, and replacement power needed when the wind doesn’t blow.
Steven F. Hayward, Ph.D., senior resident scholar, Institute of Governmental Studies, University
of California at Berkeley, and author of the 2011 Almanac of Environmental Trends.
Peter J. Nelson, J.D., vice president and senior policy fellow, Center of the American Experiment
Download original document: “Energy Policy in Minnesota: The High Cost of Failure”
Author: Deroover, Marc
This article considers a typical load supplied by a set of identical controllable units. More and more wind power is then added to the production system, and the simulation shows how the system behaves and how the wind power is used.
The analysis considers only the energy and power balances at system level, using the Load Duration Curve representation of the load. No consideration is given to the network constraints, power prices and other similar topics. It is basically a theoretical exercise that uses simple hypothesis and modelling techniques to simulate the injection of intermittent power into a classical thermal system, and tries to illustrate what intermittent power is, how it works and what are its intrinsic limitations.
When a wind turbine begins to produce power, some running mirror controllable unit must reduce its output: this is backdown power. The amount of reduced power must remain ready to be produced again if the wind stops blowing: this is backup power. The wind turbine is so tightly coupled with its mirror controllable unit that from the point of view of the network operator they cannot be treated separately. Using this approach, it is possible to describe the way the wind power is inserted into the system, and to calculate the expected resulting output of the various units.
The model shows that the intermittent power is not “added” to the controllable power but is rather “merged” with it, partly replacing the controllable power and energy by its own. It explains why installation of wind power could not result in a reduction of installed conventional power. It describes how wind power destroys the power system by forcing controllable units to run in base. It shows the limits on installed wind power, and that these limits are mainly related to the availability of storage capacity. It asserts that the lack of storage capacity becomes critical when the total installed wind power exceeds some identified thresholds. Finally it describes how we could quantify the savings of CO₂ emissions due to wind power – and shows that there are probably no savings at all.