COST SHIFTING IS THE NAME OF THE GAME REGARDING WIND AND SOLAR

Regarding wind and solar, cost shifting is rarely mentioned, identified or quantified. Those costs, c/kWh, could be quantified, but it is politically expedient, using various, often far-fetched reasons, to charge them:

 

- Directly to ratepayers, via electric rate schedules, and/or added taxes, fees and surcharges on electric bills

- Directly to taxpayers, such as carbon taxes, user fees and surcharges.

- Directly to federal and state budgets and debts

 

Per Economics 101, no cost ever disappears.

 

Eventually, the various shifted wind and solar costs, plus direct and indirect wind and solar subsidies, would increase the prices of energy and of other goods and services.

 

Efficiency and productivity improvements elsewhere in the energy sector, and other sectors of the economy, may partially, or completely, offset such increases.

 

However, wind and solar subsidies would divert capital from other sectors of the economy, which likely would result in fewer improvements in efficiency and productivity in these sectors.

http://www.windtaskforce.org/profiles/blogs/high-demand-and-low-win...

 

LIFECYCLE COST ANALYSIS OF EXISTING AND NE ELECTRICITY SOURCES

 

This report uses publicly available data to estimate the average levelized cost of electricity from existing generation resources (LCOE-Existing), as compared to the levelized cost of electricity from new generation resources (LCOE-New) that might replace them.

 

The additional information provided by LCOE-Existing presents a more complete picture of the generation choices available to the electric utility industry, policymakers, regulators and consumers.

https://www.instituteforenergyresearch.org/wp-content/uploads/2019/...

 

Existing coal-fired power plants can generate electricity at an average LCOE of $41 per megawatt-hour, whereas the LCOE of a new coal plant, operating at a similar duty cycle, would be $71 per MWh.

 

Similarly, existing combined-cycle gas power plants (CCGTs) can generate electricity at an average LCOE of $36 per MWh, whereas the LCOE of a new CCGT gas plant would be $50 per MWh.

 

Non-dispatchable wind and solar impose a cost on the dispatchable generators which are required to remain in service for peaking, filling in and balancing, 24/7/365, to ensure reliable electricity service.

 

Non-dispatchable means the output of wind and solar depends on factors beyond our control (the wind blowing and the sun shining) and cannot be relied upon for peaking, filling in and balancing.

 

Wind and solar increase the LCOE of dispatchable resources by reducing their utilization rates without reducing their fixed costs, resulting in a levelized fixed cost increase, i.e., higher c/kWh.

 

This report estimates the “imposed cost” of wind generation at about $24 per MWh, or 2.4 c/kWh, if CCGT gas generation performs the peaking, filling in and balancing.

 

The CCGT plants compensate for the erratic outputs of wind and solar by inefficiently ramping up and down their outputs at part load, and inefficiently making more frequent starts and stops.

 

All that decreases annual production of CCGT plants, adversely affects their economic viability, increases Btu/kWh and CO2/kWh, and increases wear and tear, all at no cost to the wind and solar multi-millionaires.

 

This report estimates the “imposed cost” of wind generation at about $24 per MWh, or 2.4 c/kWh, if CCGT gas generation performs the peaking, filling in and balancing.

 

This report estimates the “imposed cost” of solar generation at about $21 per MWh, or 2.1 c/kWh, if CCGT gas generation performs the peaking, filling in and balancing.

 

As a result, existing coal ($41), CCGT gas ($36), nuclear ($33) and hydro ($38) are less than half the cost of new wind ($90) or new PV solar ($88.7), if imposed costs were included.

 

NOTE: The imposed cost on ratepayers and taxpayers of various direct and indirect wind and solar subsidies are an entirely separate issue.

 

COST SHIFTING ONTO RATEPAYERS, TAXPAYERS AND DEBT 

 

Clever multi-millionaires have known about wind and solar being much more expensive compared with existing generation (coal, oil, gas, nuclear, hydro, etc.) for at least 25 years.

https://www.instituteforenergyresearch.org/wp-content/uploads/2019/...

 

By scare-mongering about climate change and global warming, and using clever lobbyists in the halls of Congress and State legislatures, they millionaires are getting all sorts of financial goodies for their lucrative tax shelters, such as:

 

1) Upfront cash grants,

2) Upfront tax credits, which dollar-for-dollar offset any income earned anywhere

3) Low-interest loans, often with a government guarantee (no risk to the bank)

4) Generous, above-market, feed-in tariffs (high c/kWh)

5) Production tax credits, which dollar-for-dollar offset any income earned anywhere

6) Loan interest deduction from taxable incomes

7) Accelerated 5-y depreciation of entire investment from taxable incomes

 

All that enables those millionaires, and others, to claim wind and solar is competitive with traditional power plants.

What more could these millionaires ask for?

 

Cost Shifting: Here is a partial list of the costs that were shifted, i.e., not charged to wind and solar plant owners, to make wind and solar appear less costly than in reality to the lay public and legislators.

A) The various forms of grid-stabilizing inertia (presently provided by synchronous gas, coal, oil, nuclear, bio and hydro plants).

B) The filling-in, peaking and balancing by traditional generators (mostly combined-cycle, gas-turbine power plants, CCGTs, in New England), to counteract the variable output, and lack of output, of wind and solar, 24/7/365, year after year. 

 

The random outputs of wind and solar require a fleet of mostly CCGTs, fueled, staffed, kept in good working order, to

 

1) inefficiently ramp up and down their outputs

2) inefficiently make more frequent cold starts and stops

3) inefficiently be in hot, synchronous standby mode.

 

All three modes cause more Btu/kWh, more CO2/kWh, and more wear and tear

http://www.windtaskforce.org/profiles/blogs/fuel-and-co2-reductions...

 

The more and more wind and solar on the US grid, the greater the fleet of CCGTs the required to counteract the variable output, and lack of output, of wind and solar, 24/7/365, year after year, which imparts added costs to owners for which they likely would not be paid.

 

The more and more wind and solar on the US grid, requiring more and more subsidies, will:

 

1) Make all of the US less productive

2) Lower US living standards,

3) Make the US less competitive on world markets

 

All of which has already happened to Europe, a wind and solar leader.

 

NOTE: All of this is quite similar to a car efficiently operating at a steady 55 mph, versus a car inefficiently operating at continuously varying speeds between 45 mph to 65 mph, and accelerating for frequent starts and decelerating for frequent stops.

C) Any battery systems to stabilize distribution grid with many solar systems. They would quickly offset downward spikes due to variable cloud cover. See URL.

http://www.windtaskforce.org/profiles/blogs/large-scale-solar-plant...

D) Any measures to deal with DUCK curves, such as 1) daily gas turbine plant down and up ramping, 2) utility-scale storage and 3) demand management.

 

NOTE: GMP in Vermont, has determined 70 of its 150 substations will eventually need upgrades to avoid “transmission ground fault overvoltage,” (TGFOV), if more solar is added per requirements of the VT Comprehensive Energy Plan. This is nothing new, as utilities in southern Germany have been dealing with these issues for over ten years, which has contributed to German households having the highest electric rates (about 30 eurocent/kWh) in Europe.

E) Grid-related costs, such as grid extensions and augmentations to connect the remotely distributed wind and solar, and to deal with variable and intermittent wind and solar on the grid. Those grid items usually are utilized at the low capacity factors of wind and solar, i.e., a lot of hardware doing little work.

F) Utility-scale electricity storage (presently provided by the world’s traditional fuel supply system).

https://www.neon-energie.de/Hirth-2013-Market-Value-Renewables-Sola...

 

The above A to F items are entirely separate from the high levels of direct and indirectsubsidies. They serve to make wind and solar appear to be much less costly than in reality. See sections 1 and 2 and Appendix.

  

All that enables wind and solar proponents to endlessly proclaim: “Wind and solar are competitive with fossil and nuclear”.

 

Example of Cost Shifting: For example, to bring wind electricity from the Panhandle in west Texas to population centers in east Texas, about 1000 miles of transmission was built at a capital cost of $7 billion. The entire cost was “socialized”, i.e., it appeared as a surcharge on residential electric bills. Wind in Texas would have been much more expensive, if the owning and operating cost, c/kWh, of those transmission lines were added to the cost of wind.

 

Example of Cost Shifting: Often the expensive grid connection of offshore wind plants, say from 20 miles south of Martha's Vineyard, across the island, then about 7 additional miles under water, and then to the reinforced mainland grid, is not separately stated in the capital cost estimates, i.e., all or part of it is provided by the utilities that buy the electricity under PPAs to make PPA-pricing appear smaller than in reality. That cost would be “socialized”, i.e., it appears as a surcharge on residential electric bills, or is added to the rate base.

 

Wind and Solar Wholesale Prices in NE: Here are some wholesale prices of wind electricity RE folks in New England, especially in Maine, do not want to talk about. They would rather dream RE fantasies, obfuscate/fudge the numbers, and aim to convert others to their dream scenarios, somewhat like religious missionaries. See table 1.

EXHORBITANT REAL COST OF WIND AND SOLAR ELECTRICITY

 

“All-in” Electricity Cost of Wind and Solar in New England

 

https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-sol...

http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-na...

 

Pro RE folks point to the “price paid to owner” as the cost of wind and solar, purposely ignoring the other cost categories. The all-in cost of wind and solar, c/kWh, includes:

 

1) Above-market-price paid to Owners 

2) Subsidies paid to Owners

3) Owner return on invested capital at about 9%/y

4) Grid extension/augmentation

5) Grid support services

6) Future battery systems

 

Comments on table 5

   

- Vermont legacy Standard Offer solar systems had greater subsidies paid to owner, than newer systems

 

- Wind prices paid to owner did not have the drastic reductions as solar prices.

 

- Vermont utilities are paid about 3.5 c/kWh for various costs they incur regarding net-metered solar systems

 

- "Added to rate base" is the cost wind and solar are added to the utility rate base, used to set electric rates.

 

- “Total cost”, including subsidies to owner and grid support, is the cost at which wind/solar are added to the utility rate base

 

- “NE utility cost” is the annual average cost of purchased electricity, about 6 c/kWh, plus NE grid operator charges, about 1.6 c/kWh

for a total of 7.6 c/kWh.

 

- “Grid support costs” would increase with increased use of battery systems to counteract the variability and intermittency of increased build-outs of wind and solar systems. See URL

https://www.windtaskforce.org/profiles/blogs/fuel-and-co2-reduction...

 

NOTES:

1) NE wholesale grid price averaged about 5 c/kWh, starting in 2009, due to low-cost CCGT and nuclear plants providing at least 65% of all electricity loaded onto the NE grid, in 2019.

 

https://www.iso-ne.com/about/key-stats/resource-mix/

https://nepool.com/uploads/NPC_20200305_Composite4.pdf


2) There are Owning costs, and Operating and Maintenance costs, of the NE grid

ISO-NE charges these costs to utilities at about 1.6 c/kWh. The ISO-NE charges include: 

 
Regional network services, RNS, based on the utility peak demand occurring during a month

Forward capacity market, FCM, based on the utility peak demand occurring during a year.

 

Table 5/VT & NE sources

Paid to

Subsidy

Grid

GMP

 Added

ISO-NE

Total

NE

Times

 

 

paid to

support

 

to rate

RNS+

 

utility

 

owner

towner

cost

adder

base

FCM

cost

cost

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

c/kWh

Solar, rooftop, net-metered, new

17.4

5.2

2.1

3.5

20.9

1.6

29.8

7.6

3.92

Solar, rooftop, net-metered, legacy

18.2

5.4

2.1

3.5

21.7

1.6

30.8

7.6

4.05

Solar, standard offer, combo

11.0

6.74

2.1

11.0

1.6

21.44

7.6

2.82

Solar, standard offer, legacy

21.7

10.5

2.1

21.7

1.6

35.9

7.6

4.72

Wind, ridge line, new

8.5

3.9

2.4

8.5

1.6

16.4

7.6

2.15

Wind, offshore, new

9.0

4.1

2.4

9.0

1.6

17.1

7.6

2.25

Sample calculations:

 

NE utility cost = 6, Purchased + 1.6, (RNS + FCM) = 7.6 c/kWh

Added to utility rate base = 17.4, net-metered, new + 3.5 = 20.9 c/kWh

Total cost = 17.4 + 5.2 + 2.1 + 3.5 + 1.6 = 29.8 c/kWh

Excludes costs for very expensive battery systems

Excludes costs for very expensive floating, offshore wind systems

Excludes cost for dealing with shortfalls during multi-day wind/solar lulls. See URL

https://www.windtaskforce.org/profiles/blogs/wind-and-solar-provide-50-percent-of-future-new-england

 

“Added to rate base” is for recent 20-y electricity supply contracts awarded by competitive bidding in NE.

“Added to rate base” would be much higher without subsidies and cost shifting.

Areas with better wind and solar conditions, and lower construction costs/MW have lower c/MWh, than NE

New England has average winds, has highest on-shore turnkey costs ($2,400/kW in 2020), has highest PPA c/kWh

See page 39 of URL

https://www.energy.gov/sites/default/files/2021-08/Land-Based%20Wind%20Market%20Report%202021%20Edition_Full%20Report_FINAL.pdf

APPENDIX 1

Wind and Solar Subsidies Provide a Bonanza for Wall Street

http://www.windtaskforce.org/profiles/blogs/the-more-wind-and-solar...

 

This URL shows wind and solar prices per kWh would be at least 50% higher without direct and indirect subsidies. They would be even higher, if the costs of other items were properly allocated to the owners of wind and solar projects, instead of shifted elsewhere. See below section High Levels of Wind and Solar Require Energy Storage.

 

http://www.windtaskforce.org/profiles/blogs/economics-of-tesla-powerpack-and-powerwall-systems

http://www.windtaskforce.org/profiles/blogs/large-scale-solar-plant...

http://www.usu.edu/ipe/wp-content/uploads/2016/04/UnseenWindFull.pdf

 

This URL shows about 2/3 of the financial value of a wind project is due to direct and indirect subsidies, and the other 1/3 is due to electricity sales.

http://johnrsweet.com/Personal/Wind/PDF/Schleede-BigMoney-20050414.pdf

 

- Indirect subsidies are due to federal and state tax rebates due to loan interest deductions from taxable income, and federal and state MARCS depreciation deductions from taxable income.

 

- Direct subsidies are up-front federal and state cash grants, the partial waiving of state sales taxes, the partial waiving of local property, municipal and school taxes. See URLs.

 

http://www.windtaskforce.org/profiles/blogs/excessive-subsidies-for-2200-kw-field-mounted-solar-system-in

https://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf

 

Any owner, foreign or domestic, of a wind and/or solar project, looking to shelter taxable income from their other US businesses, is allowed to depreciate in 6 years almost the entire cost of a wind and solar project under the IRS scheme called Modified Accelerated Cost Recovery System, MARCS. The normal period for other forms of utility depreciation is about 20 years.

 

Then, with help of Wall Street financial wizardry from financial tax shelter advisers, such as BNEF*, JPMorgan, Lazard, etc., the owner sells the project to a new owner who is allowed to depreciate, according to MARCS, almost his entire cost all over again. Over the past 20 years, there now are many thousands of owners of RE projects who are cashing in on that bonanza.

 

Loss of Federal and State Tax Revenues

The loss of tax revenues to federal and state governments due to MARCS was estimated by the IRS at $266 billion for the 5y period of 2017 - 2021, or about $53.2 billion/y.

The IRS is required to annually provide a 5y-running estimate to Congress, by law.

The next report would be for the 2018 - 2022 period

 

The indirect largesse of about $53.2 billion/y, mostly for wind and solar plants^ that produce expensive, variable/intermittent electricity, does not show up in electric rates. It likely is added to federal and state debts.

 

Most of the direct federal subsidies to all energy projects of about $25 billion/y also do not show up in electric rates. They likely were also added to the federal debt.

 

Most of the direct state subsidies to RE projects likely were added to state debts.

 

The additional costs of state-mandated RPS requirements likely were added to the utility rate base for electric rates.

 

* BNEF is Bloomberg New Energy Finance, owned by the pro-RE former Mayor Bloomberg of New York, which provides financial services to the wealthy of the world, including providing them with tax avoidance schemes.

 

^ In New England, wind is near zero for about 30% of the hours of the year, and solar is minimal or zero for about 70% of the hours of the year. Often these hours coincide for multi-day periods, which happen at random throughout the year, per ISO-NE real-time, minute-by-minute generation data posted on its website. Where would the electricity come from during these hours; $multi-billion battery storage, insufficient capacity hydro storage?

 

https://www.nrel.gov/docs/fy17osti/68227.pdf

https://www.greentechmedia.com/articles/read/tax-equity-investors-break-their-silence-on-tax-bill#gs.GDbC2YIS

 

Warren Buffett Quote: "I will do anything that is basically covered by the law to reduce Berkshire's tax rate," Buffet told an audience in Omaha, Nebraska recently. "For example, on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit." 

https://www.usnews.com/opinion/blogs/nancy-pfotenhauer/2014/05/12/e...

APPENDIX 2

Here are the federal subsidies for various electricity sources.

Wind and solar are coddled to the nth degree.

This does not include state and local subsidies.

NOTE: The DOE loan guarantee program was discontinued in 2016

https://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf

Table 2/2016

To Grid

Direct

Tax

R&D

DOE loan

Total

Generation

Subsidy

Subsidy

share

Share

TWh

$million

$million

$million

$million

$million

%

%

c/kWh

Coal

1208

NG

1431

Nuclear

799

Other

21

Total

3459

8302

84.8

55.4

2.40

RE

Biomass

63

18

34

27

79

1.25

Geothermal

16

41

34

10

85

5.31

Hydro

268

2

34

2

38

0.14

Solar

51

771

1251

209

2231

43.75

Wind

220

4

1239

24

1267

5.76

Other

41

34

95

170

Subtotal

618

877

2626

367

3870

15.2

25.8

6.26

Biofuels*

33

2690

90

2813

18.8

Total RE

4077

909

5316

456

6681

100.0

Total

14983

* Mostly ethanol from corn

APPENDIX 3

The first 10 years, during which the VERY LUCRATIVE PRODUCTION TAX CREDIT is in effect, degradation of wind system production is an average of 0.17%/y or 1.7% for 10 years. 

 

However, during years 11 through 17, during which the PTC is not in effect, degradation is 13 - 1.7 = 11.3%, because the owners have milked the subsidies and no longer give a damn.

 

Some owners sell such projects after 10 years. The new owners are allowed to restart the lucrative subsidies all over again. See URL

http://www.windtaskforce.org/profiles/blogs/turbine-output-drops-st...

 

If a rich, profitable, entity has $5 million of taxable income in a year, it might pay federal taxes of $1 million.

If that entity (Google, Apple, IBM, Warren Buffett, and other rich people) owns a wind system and collects a PTC of $1 million/y, it pays NO TAXES FOR TEN YEARS.

 

The tax burden is shifted to ratepayers and taxpayers and added to government debt. Ratepayers and taxpayers have to pay more in taxes, higher electric rates, which results in higher prices of goods and services.

 

We are "saving the world", the Wall Street way.

APPENDIX 4

IRELAND FUEL AND CO2 REDUCTIONS DUE TO WIND ENERGY LESS THAN CLAIMED    

https://www.windtaskforce.org/profiles/blogs/fuel-and-co2-reduction...

 

EXCERPT

The variable outputs of heavily-subsidized wind and solar are totally unusable, could not be fed into the grid, without the presence of a fleet of quick-reacting power plants, such as CCGTs, to counteract to ups and downs of these outputs, on a less than minute-by-minute basis, 24/7/365, year after year.

 

The more wind and solar systems tied to the grid, the larger the fleet of counteracting plants, that need to fueled, staffed, kept in good-working order. Such a fleet costs many c/kWh to own and operate.

 

Heavily-subsidized wind and solar are a black hole money pit, from day one, i.e., never profitable, except for the Warren Buffett folks with lucrative tax shelters, even at low penetration levels, on an A-to-Z, mine-to-waste-dump, basis.

A black hole getting wider and deeper, as more wind and solar are added to the grid.

 

Warren Buffett Quote: "I will do anything that is basically covered by the law to reduce Berkshire's tax rate," Buffet told an audience in Omaha, Nebraska recently. "For example, on wind energy, we get a tax credit, if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit." 

https://www.usnews.com/opinion/blogs/nancy-pfotenhauer/2014/05/12/e...

 

 

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Comment by Willem Post on July 1, 2019 at 10:14am

Thank you, Brad

I will be making some additions to the article, so stay tuned.

Comment by Brad Blake on June 30, 2019 at 1:17pm

Excellent analysis.  Sadly, the media that is complicit in promoting the farce of wind power would NEVER include such information.

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

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