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Comment by Willem Post on December 10, 2023 at 6:29am

The Crippling Economic Costs Of Green Energy Subsidies

https://www.windtaskforce.org/profiles/blogs/the-crippling-economic...

By Jonathan Lesser

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The green energy subsidies in the Inflation Reduction Act (IRA) have been justified by the Biden Administration as a booster of U.S. economic growth and jobs. 

But when the subsidies are tallied and the overall impacts evaluated, the IRA is a job and economic growth killer.

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Under the IRA, the lion’s share of subsidies will be paid to wind and solar developers. 

The subsidies will not expire until electric industry carbon emissions fall by at least 75% below 2005 levels, after which they will gradually decrease.  

Even the most optimistic forecasts, prepared by the U.S. Energy Information Administration (EIA), show, this will not occur until at least 2046. 

Thus, the subsidies for wind and solar will continue unabated for decades. 

In total, the subsidies will far exceed what the U.S. government spent in today’s dollars to combat the Great Depression.

The single largest subsidy is the federal investment tax credit (ITC).  

Most wind and solar projects will be able to claim a minimum 30% ITC, plus be eligible for an additional 10% ITC, if the projects meet IRA domestic content requirements. This tax credit can be used to offset federal taxes owed by any other business owned by the developers.

 

The EIA’s optimistic forecast projects about 900,000 megawatts (MW) of solar systems, 350,000 MW of onshore wind systems, and 24,000 MW of offshore wind systems by 2046. The IRA calls for 36,000 MW of offshore wind systems by 2030, a very expensive and physically impossible goal.

If all of these systems are built, it will result in direct ITC subsidies totaling between $500 billion and $1 trillion, depending on construction costs, which has increased at least 60% since 2020, which means the electricity price, c/kWh, sold to utilities is also up 60% , even after at least 50% of subsidies 

The greater the owning and operating costs of a project, the greater the subsidies. 

Whereas, prior to 2020, wind and solar proponents claimed costs/kWh would be decreasing, the reality is the opposite.  

Offshore wind developers are clamoring to renegotiate contracts they signed a few months ago, including: 1) guaranteed price adjustments for future increasing costs (so-called escalation clauses), and 2) relaxing the IRA domestic content requirements, so they can claim the additional 10% ITC.

Despite spiraling FEDERAL deficits, almost $2 trillion in the 2023 fiscal year, ending October 31, green energy subsidies will be financed with still more government debt. 

With interest rates at more normal levels, interest cost on the $34 trillion national debt will be at least $1 trillion each year, that will also be added to the national debt; an unstoppable downward spiral!
It is obvious, a law is needed to prohibit the federal government to have budget deficits

The increased subsidies will greatly increase the cost of the inflationary IRA bill, from the original estimate of $391 billion when enacted, to a new estimate of at least $1.5 trillion, per Goldman Sachs

Of the $1.5 trillion of IRA funds, several hundred $billion dollars will be for wind and solar systems to be placed in operation by 2030.
That rapid pace will overwhelm existing infrastructures to deliver and place in operation that much wind and solar capacity

Firstly, that increased activity, will crowd out more productive private investment in the energy sector and will reduce the resources available for much more efficient forms of generation, such as small modular nuclear reactors. 

Secondly, as the deficit and national  debt increase further, higher interest rates will crowd out private investment in more productive private sectors of the economy.

Along with the Administration’s push to “electrify” the economy, such as 1) higher vehicle mileage standards that act as a de facto mandate for electric vehicles, and 2) proposed bans on natural gas appliances, the result, as has been experienced in Europe, will be soaring electricity prices for households and businesses 

Those higher electricity prices will reduce economic growth and employment, far more than the IRA investments can boost them

Whereas, the subsidies will benefit wind and solar businesses, the overall economic impacts for the country will be negative and crippling.

One gauge of the adverse economic impacts of green subsidies is the cost to taxpayers to create the promised thousands of green energy jobs, especially for offshore wind. 

Using offshore wind developers’ claimed job creation, the average subsidy for each green job will be over $2 million per year. 

Forcing taxpayers to pay millions of dollars each year for each job created, while claiming that doing so will bolster the U.S. economy, is Alice in Wonderland economics.

Politicians who promote green energy, and for their own re-election and self-interests, may prefer to ignore basic economic realities, but those economic realities will have their revenge in due time!

Eventually, the profligate spending on low-value green energy will collapse under its own weight, having inflicted much socioeconomic damage.

 

Sadly, this is not an experiment that the U.S. needs to undertake, because it has abundant natural resources

European experience with increasing electricity and energy cost due to expensive wind/solar/battery/EV systems, tell us all we need to know. 

But as the lyrics from the old song begin, “fools rush in where wise men dare not go”

 

Jonathan Lesser is the president of Continental Economics, a senior fellow with the Discovery Institute, and an adjunct fellow with the Manhattan Institute.  His report, “Green Energy and Economic Fabulism,” was recently published by the Global Warming Policy Foundation.

APPENDIX 1

Floating Offshore Wind Systems in the Impoverished State of Maine

https://www.windtaskforce.org/profiles/blogs/floating-offshore-wind...

World Offshore Wind Capacity Placed on Operation in 2021

During 2021, worldwide offshore wind capacity placed in operation was 17,398 MW, of which China 13,790 MW, and the rest of the world 3,608 MW, of which UK 1,855 MW; Vietnam 643 MW; Denmark 604 MW; Netherlands 402 MW; Taiwan 109 MW

Of the 17,398 MW, just 57.1 MW was floating, about 1/3%

At end of 2021, 50,623 MW was in operation, of which just 123.4 MW was floating, about 1/4%

https://www.energy.gov/eere/wind/articles/offshore-wind-market-repo...

Despite the meager floating offshore MW in the world, pro-wind politicians, bureaucrats, etc., aided and abetted by the lapdog Main Media and "academia/think tanks", in the impoverished State of Maine, continue to fantasize about building 3,000 MW of 850-ft-tall floating offshore wind turbines by 2040!!

Maine government bureaucrats, etc., in a world of their own climate-fighting fantasies, want to have about 3,000 MW of floating wind turbines by 2040; a most expensive, totally unrealistic goal, that would further impoverish the already-poor State of Maine for many decades.

Those bureaucrats, etc., would help fatten the lucrative, 20-y, tax-shelters of mostly out-of-state, multi-millionaire, wind-subsidy chasers, who likely have minimal regard for:

1) Impacts on the environment and the fishing and tourist industries of Maine, and

2) Already-overstressed, over-taxed, over-regulated Maine ratepayers and taxpayers, who are trying to make ends meet in a near-zero, real-growth economy.

Those fishery-destroying, 850-ft-tall floaters, with 24/7365 strobe lights, visible 30 miles from any shore, would cost at least $7,500/ installed kW, or at least $22.5 billion, if built in 2023 (more after 2023)

See below Norwegian floating offshore cost of $8,300/installed kW

Almost the entire supply of the Maine projects would be designed and made in Europe, then transported across the Atlantic Ocean, in specialized ships, also designed and made in Europe, then unloaded at the Maine storage/pre-assembly/staging area, then barged to specialized erection ships, for erection of the floating turbines by specialized cranes, also designed and made in Europe

About 300 Maine people would have pre-assembly/staging/erection jobs, during the erection phase

The other erection jobs would be by specialized European people, mostly on cranes and ships
About 100 Maine people would have long-term O&M jobs during the 20-y electricity production phase

The projects would produce electricity at about 40 c/kWh, no subsidies, at about 20 c/kWh, with subsidies, the wholesale price at which utilities would buy from Owners (higher prices after 2023)

https://www.maine.gov/governor/mills/news/governor-mills-signs-bill...

The Maine woke bureaucrats are falling over each other to prove their "greenness", offering $millions of this and that for free, but all their primping and preening efforts has resulted in no floating offshore bids from European companies

The Maine people have much greater burdens to look forward to for the next 20 years, courtesy of the Governor Mills incompetent, woke bureaucracy that has infested the state government 

The Maine people need to finally wake up, and put an end to all the climate scare-mongering, which aims to subjugate and further impoverish them, by voting the entire Democrat woke cabal out and replace it with rational Republicans in 2024

The present course leads to financial disaster for the impoverished State of Maine and its people.

The purposely-kept-ignorant Maine people do not deserve such maltreatment

NOTE: The above electricity prices compare with the average New England wholesale price of about 5 c/kWh, during the 2009 - 2022 period, 13 years, courtesy of:

 

Natural gas-fueled CCGT plants, with low-cost, low-CO2, very-low particulate/kWh

Nuclear plants, with low-cost, near-zero CO2, zero particulate/kWh

Hydro plants, with low-cost, near-zero-CO2, zero particulate/kWh

Cabling to Shore Plus $Billions for Additional Gridwork On Shore

A high voltage cable would be hanging from each unit, until it reaches bottom, say about 200 to 500 feet. 
The cables would need some type of flexible support system
There would be about 5 cables, each connected to sixty, 10 MW wind turbines, making landfall on the Maine shore, for connection to the New England high voltage grid. 
The onshore grid will need $billions for expansion/reinforcement to transmit electricity to load centers, mostly in southern New England.

Floating Offshore a Major Financial Burden on Maine People

Rich Norwegian people can afford to dabble in such expensive demonstration follies, but the over-taxed, over-regulated, impoverished Maine people would buckle under such a heavy burden, while trying to make ends meet in the near-zero, real-growth Maine economy.

Maine folks need lower energy bills, not higher energy bills.

APPENDIX 2

Floating Offshore Wind in Norway

Equinor, a Norwegian company, put in operation, 11 Hywind, floating offshore wind turbines, each 8 MW, for a total of 88 MW, in the North Sea. The wind turbines are supplied by Siemens, a German company

Production will be about 88 x 8766 x 0.5, claimed lifetime capacity factor = 385,704 MWh/y, which is about 35% of the electricity used by 2 nearby Norwegian oil rigs, which cost at least $1.0 billion each.

The existing diesel and gas-turbine generators on the rigs, will provide the other 65%.

The generators will counteract the up/down output of the wind turbines, on a less-than-minute-by-minute basis, 24/7/365

The generators will provide almost all the electricity during low-wind periods (such as minor lulls), and during high-wind periods, when rotors are feathered and locked.

The capital cost of the entire project was about 8 billion Norwegian Kroner, or about $730 million, as of August 2023, when all 11 units were placed in operation, or $730 million/88 MW = $8,300/kW. See URL

That cost was much higher than the estimated 5 billion NOK in 2019, i.e., 60% higher

The project is located about 70 miles from Norway, which means minimal transport costs of the entire supply to the erection sites

https://www.offshore-mag.com/regional-reports/north-sea-europe/arti...

https://en.wikipedia.org/wiki/Floating_wind_turbine

The project would produce electricity at about 42 c/kWh, no subsidies, at about 21 c/kWh, with 50% subsidies 

In Norway, all work associated with oil rigs is very expensive.

Workers are on the rigs for 6 weeks, and get 6 weeks off with pay, and are paid well over $150,000/y, plus benefits.

Floating Offshore Wind in Maine

If such floating units were used in Maine, the production costs likely would be even higher, because of:

1) the additional cost of transport of almost the entire supply, including specialized ships and cranes, across the Atlantic Ocean, plus

2) the additional $300 to $500 million capital cost of any onshore facilities for storing/pre-assembly/staging/barging to sites

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APPENDIX 3

Offshore Wind

Most folks, seeing only part of the picture, write about wind energy issues that only partially cover the offshore wind situation, which caused major declines of the stock prices of Siemens, Oersted, etc., starting at the end of 2020; the smart money got out
All this well before the Ukraine events, which started in February 2022. See offshore wind costs/kWh in article

World’s Largest Offshore Wind System Developer Abandons Two Major US Projects as Wind/Solar Bust Continues 
https://www.windtaskforce.org/profiles/blogs/world-s-largest-offsho...

US/UK Governments Offshore Wind Goals

1) 30,000 MW of offshore by 2030, by the posse of extremists in the US government 
2) 36,000 MW of offshore by 2030, and 40,000 MW by 2040, by the disconnected-from-markets UK government

Those US/UK goals were physically unachievable, even if there were abundant, low-cost financing, and low inflation, and low-cost energy, materials, labor, and a robust, smooth-running supply chain, to place in service about 9500 MW of offshore during each of the next 7 years, from start 2024 to end 2030, which has never been done before in such a short time. See article
 
US/UK 66,000 MW OF OFFSHORE WIND BY 2030; AN EXPENSIVE FANTASY  
https://www.windtaskforce.org/profiles/blogs/biden-30-000-mw-of-off...

NOTE: During an interview, a commentator was reported to say” “renewables are not always reliable” 
That shows the types of ignorami driving the bus
WIND AND SOLAR ARE NEVER, EVER RELIABLE

Levelized Cost of Energy by US-EIA

The wind/solar/battery bubble is in meltdown mode. This is not a surprise, because the US-EIA makes LCOE “evaluations” of W/S/B systems that purposely exclude major LCOE items.

The EIA deceptions reinforced the delusion W/S are competitive with fossil fuels, which is far from reality.

The excluded LOCE items are shifted to taxpayers, ratepayers, and added to government debts.

W/S would not exist without at least 50% subsidies

W/S output could not be physically fed into the grid, without the last four freebies.

 

1) Subsidies equivalent to about 50% of project owning and operations cost,
2) Grid extension/reinforcement to connect remote W/S to load centers
3) A fleet of quick-reacting power plants to counteract the W/S up/down output, on a less-than-minute-by-minute basis, 24/7/365, 
4) A fleet of power plants to provide electricity during low-W/S periods, and during high-W/S periods, when rotors are feathered and locked,
5) Output curtailments to prevent overloading the grid, i.e., paying owners for not producing what they could have produced

Batteries Far From an Economic Alternative to Power Plant Fleets

Turnkey capital costs of large scale-battery systems are $575/installed kWh; based on 2023 pricing of Tesla-based systems. See article

BATTERY SYSTEM CAPITAL COSTS, OPERATING COSTS, ENERGY LOSSES, AND AGING
https://www.windtaskforce.org/profiles/blogs/battery-system-capital...

With 6.5% money on a 50% bank loan, and 10% for owner return on a 50% investment, and 19% HV grid to HV grid loss, and 15-y life:

At 10% throughput, the delivered electricity cost is about 183.8 c/kWh, no subsidies, about 91.9 c/kWh with 50% subsidies, on top of the 6 c/kWh cost of the electricity from the HV grid to charge the batteries

At 40% throughput, about 23 c/kWh, on top of the 6 c/kWh

Excluded costs/kWh: 1) O&M; 2) system aging, 3) HV grid to HV grid loss, 3) grid extension/reinforcement to connect the battery systems, 5) downtime of parts of the system, 6) decommissioning in year 15, i.e., disassembly, reprocessing and storing at hazardous waste sites.
 
NOTE: The 40% throughput is close to Tesla’s recommendation of 60% maximum throughput, i.e., not charging above 80%  full and not discharging below 20% full, to achieve a 15-y life, with normal aging

NOTE: Tesla’s recommendation was not heeded by the owners of the Hornsdale Power Reserve in Australia. They added Megapacks to offset rapid aging of the original system, and added more Megapacks to increase the rating of the expanded system.

http://www.windtaskforce.org/profiles/blogs/the-hornsdale-power-res...

THE PHYSICAL AND ECONOMIC FUTILITY OF W/S/B HAS BEEN CLEAR TO ENERGY SYSTEMS ANALYSTS AND ENGINEERS SINCE ABOUT 2000

APPENDIX 4

Solar is in a Downturn, Similar to Offshore Wind

SolarEdge Technologies shares plunged about two weeks ago, after it warned about decreasing European demand. 

Solar Panels Are Much More Carbon-Intensive Than Experts are Willing to Admit

https://www.windtaskforce.org/profiles/blogs/solar-panels-are-more-...

SolarEdge Melts Down After Weak Guidance 

https://www.windtaskforce.org/profiles/blogs/wind-solar-implosion-s...

The Great Green Crash – Solar Down 40%

https://wattsupwiththat.com/2023/11/08/the-great-green-crash-solar-...

APPENDIX 5

Miscellaneous Articles

World's Largest Offshore Wind System Developer Abandons Two Major US Projects as Wind/Solar Bust Continues 

https://www.windtaskforce.org/profiles/blogs/world-s-largest-offsho...

US/UK 66,000 MW OF OFFSHORE WIND BY 2030; AN EXPENSIVE FANTASY  

https://www.windtaskforce.org/profiles/blogs/biden-30-000-mw-of-off...

BATTERY SYSTEM CAPITAL COSTS, OPERATING COSTS, ENERGY LOSSES, AND AGING

https://www.windtaskforce.org/profiles/blogs/battery-system-capital...

Regulatory Rebuff Blow to Offshore Wind Projects; Had Asked for Additional $25.35 billion

https://www.windtaskforce.org/profiles/blogs/regulatory-rebuff-blow...

Offshore Wind is an Economic and Environmental Catastrophe

https://www.windtaskforce.org/profiles/blogs/offshore-wind-is-an-ec...

Four NY offshore projects ask for almost 50% price rise

https://www.windtaskforce.org/profiles/blogs/four-ny-offshore-proje...

EV Owners Facing Soaring Insurance Costs in the US and UK

https://www.windtaskforce.org/profiles/blogs/ev-owners-facing-soari...

U.S. Offshore Wind Plans Are Utterly Collapsing

https://www.windtaskforce.org/profiles/blogs/u-s-offshore-wind-plan...

Values Of Used EVs Plummet, As Dealers Stuck With Unsold Cars

https://www.windtaskforce.org/profiles/blogs/values-of-used-evs-plu...

Electric vehicles catch fire after being exposed to saltwater from Hurricane Idalia

https://www.windtaskforce.org/profiles/blogs/electric-vehicles-catc...

The Electric Car Debacle Shows the Top-Down Economics of Net Zero Don’t Add Up

https://www.windtaskforce.org/profiles/blogs/the-electric-car-debac...

Lifetime Performance of World’s First Offshore Wind System in the North Sea 

https://www.windtaskforce.org/profiles/blogs/lifetime-performance-o...

Solar Panels Are Much More Carbon-Intensive Than Experts are Willing to Admit

https://www.windtaskforce.org/profiles/blogs/solar-panels-are-more-...

IRENA, a Renewables Proponent, Ignores the Actual Cost Data for Offshore Wind Systems in the UK
https://www.windtaskforce.org/profiles/blogs/irena-a-european-renew...

UK Offshore Wind Projects Threaten to Pull Out of Uneconomical Contracts, unless Subsidies are Increased

https://www.windtaskforce.org/profiles/blogs/uk-offshore-wind-proje...

CO2 IS A LIFE GAS; NO CO2 = NO FLORA AND NO FAUNA

https://www.windtaskforce.org/profiles/blogs/co2-is-a-life-gas-no-c...

AIR SOURCE HEAT PUMPS DO NOT ECONOMICALLY DISPLACE FOSSIL FUEL BTUs IN COLD CLIMATES

https://www.windtaskforce.org/profiles/blogs/air-source-heat-pumps-...

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

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

APPENDIX 6

According to the IAEA, during the first half of 2023, a total of 407 nuclear reactors are in operation at power plants across the world, with a total capacity at about 370,000 MW

Nuclear was 2546 TWh, or 9.2%, of world electricity production in 2022

https://www.windtaskforce.org/profiles/blogs/batteries-in-new-england

Rosatom, a Russian Company, is building more nuclear reactors than any other country in the world, according to data from the Power Reactor Information System of the International Atomic Energy Agency, IAEA.

The data show, a total of 58 large-scale nuclear power reactors are currently under construction worldwide, of which 23 are being built by Russia.

Nuclear Plants: A typical plant may have up to 4 reactors, usually about 1,200 MW each

In Egypt, 4 reactors, each 1,200 MW = 4,800 MW for $30 billion, or about $6,250/kW, which includes financing by Egypt $5 billion and by Russia $25 billion
That cost is at least 40% less then US/UK/EU

In Turkey, 4 reactors, each 1,200 MW = 4,800 MW for $20 billion, or about $4,200/kW, entirely financed by Russia. The plant will be owned and operated by Rosatom

Rosatom, created in 2007 by combining several Russian companies, usually provides full service during the entire project life, such as training, new fuel bundles, refueling, waste processing and waste storage in Russia, etc., because the various countries likely do not have the required systems and infrastructures

Nuclear vs Wind: Remember, these nuclear plants reliably produce steady electricity, at reasonable cost/kWh, and have near-zero CO2 emissions

They have about 0.90 capacity factors, and last 60 to 80 years

Nuclear do not require counteracting plants. They can be designed to be load-following, as some are in France

Offshore wind systems produce variable, unreliable power, at very high cost/kWh, and near CO2-free
They have about 0.45 CFs, and last 20 to 25 years
They require a fleet of quick-reacting power plants to counteract the up/down wind outputs, on a less-than-minute-by-minute basis, 24/7/365, plus major expansion/reinforcement of electric grids to connect the wind systems to load centers, plus a lot of area.

Major Competitors: Rosatom’s direct competitors, according to PRIS data, are three Chinese companies: CNNC, CSPI and CGN.
They are building 22 reactors, but it should be noted, they are being built primarily inside China, and the Chinese partners are building five of them together with Rosatom.

American and European companies are lagging behind Rosatom, by a wide margin,” Alexander Uvarov, a director at the Atom-info Center and editor-in-chief at the atominfo.ru website, told TASS.

Tripling Nuclear? During COP28 in opulent Dubai, Kerry called for the world to triple CO2-free nuclear, from 370,200 MW to about 1,110,600 MW, by 2050.

https://phys.org/news/2023-12-triple-nuclear-power-cop28.html

Based on past experience in the US and EU, it takes at least 10 years to commission nuclear plants

That means, plants with about 39 reactors must be started each year, for 16 years (2024 to 2040), to fill the pipeline, to commission the final ones by 2050, in addition to those already in the pipeline.

New nuclear: Kerry’s nuclear tripling by 2050, would be 11% of the 2050 world electricity generation. See table

Existing nuclear: If some of the older plants are shut down, and plants already in the pipeline are placed in operation, that nuclear would be about 5% to the world total generation in 2050

Nuclear was 9.2% of 2022 generation.

Total nuclear would be about 16%, and would have minimal impact on CO2 emissions and ppm in 2050. 

Infrastructures and Manpower: The building of the new nuclear plants would require a major increase in infrastructures and educating and training of personnel, in addition to the cost of the power plants.

https://www.visualcapitalist.com/electricity-sources-by-fuel-in-202....

Existing Nuclear, MW, 2022	370200
Proposed tripling	3
Tripled Nuxlear, MW, 2050	1110600
New Nuclear, MW	740400
MW/reactor	1200
Reactors	617
New Reactors, rounded	620
Reactors/site	2
Sites	310
New nuclear production, MWh, 2050	5841311760
Conversion factor	1000000	%
New nuclear production, TWh, 2050	5841	11
World total production, TWh, 2050	53000