Try $370 Billion in Subsidies
The federal government just put into place $370 billion in subsidies, mostly tax benefits, for “renewable” energy. None of that would be necessary, argues Francis Menton, if wind and solar were in fact the cheapest sources.
Francis Menton explains the latest up-to-date metric – the Levelized Cost of Electricity (LCOE) – adopted by promoters of wind and solar generators. As Mr. Menton notes, it’s meant to mislead the gullible.
If you try to study descriptions of LCOE calculations, you will find that they are chock full of technical terms like “capital” and “operating” costs and “life cycles” and “discount rates,” and other such things that all sound so terribly sophisticated.
What about Costs of Energy Storage/Backup
In fact it is all a smokescreen to hide the fact that an LCOE calculation completely omits the dominant costs of generating reliable electricity using mostly or entirely wind and solar generators. These dominant costs are the costs of energy storage and/or backup, the costs of overbuilding, and the costs of additional transmission.
For prior Manhattan Contrarian discussion of LCOE, try going here or here. The second of those posts, from January 22, 2022, with the title “What Solution Do Renewable Energy Advocates Offer For The Problem Of Storage?”, has the following quote:
Since the cost of storage is the dominant cost of the all-renewable system, LCOE is the opposite of a “neat quantification” of comparative electricity generation costs, and rapidly becomes completely misleading as the percentage generated from renewables increases beyond 50%.
Francis Menton and his wife were sponsors at a Soho Forum “climate change” debate yesterday. Debaters included Andrew Dessler of Texas A&M University for the affirmative and Steve Koonin of NYU for the negative. The Mentons’ daughter, Jane Menton, Chief of Operations at Soho, was responsible for lining up the speakers. “Climate Science compels us to make large and rapid reductions in greenhouse gas emissions” was the proposition debated.
Part of Dessler’s presentation, reports Mr. Menton, dealt with the ease and low cost of transitioning to a low emissions future.
This began with the assertion — repeated multiple times during the debate — that wind turbines and solar panels are now the cheapest ways to produce electricity. A chart showed comparisons of relative costs of wind and solar generation versus various forms of fossil fuels and nuclear. Wind and solar were clearly the cheapest, cheaper than even the latest natural gas generators. At the bottom of the chart, the basis for the comparison was given. The letters LCOE were legible. That’s “Levelized Cost of Energy.”
Mr. Menton goes into a lot of detail, which you can read on his Manhattan Contrarian site. Ultimately, continues Mr. Menton, it doesn’t really matter whether an Andrew Dessler or anyone else claims that wind, solar, electricity are cheap based on some flawed metric like LCOE.
The Numbers Need to Jive
Big investors put professionals on the job of evaluating projects, and projects don’t get built unless the numbers add up. And thus there is no such thing as a wind or solar project that gets built without massive government subsidies, either in the form of direct cash or tax savings of some sort.
The federal government just enacted a law putting up some $370 billion in subsidies, mostly tax benefits, for “renewable” energy. None of that would be needed at all if wind and solar were in fact the cheapest sources.
Meanwhile, in Europe, which is way ahead of us in building wind and solar facilities, energy costs are soaring. Sooner or later, concludes Mr. Menton, this will become obvious to all.