Wind & Solar: GE Exec says legacy coal and nuclear cost too much
Many people don’t realize solar energy and wind energy are cheap because they have a price stuck in their head from 10 years ago, 5 years ago, or even just 3 years ago. As much as we at CleanTechnica repeat the fact that wind and solar are often the cheapest option for new electricity capacity, people in the general public and even in highly related fields don’t realize that renewable energy costs have fallen so much so fast. They don’t realize that clean electricity options are often the cheapest options.
It seems that people at the top of the Trump administration (including Donald Trump himself and people in the administration’s Department of Energy) have been in that uninformed group — or at least pretend to be in it. Incidentally, a new grid study from the Department of Energy (DOE) points out that math actually isn’t so hard and it’s unhelpful to lie about the economics of free fuel.
Tina already reported that a draft of the grid reliability study found that solar and wind energy haven’t reduced US grid reliability. But there were other gems in the report.
The impetus for the report was supposedly that renewable energy was forcing coal and nuclear plants off the grid, and it seems the administration’s aim was to brand renewables as uncompetitive by “discovering” extra costs they imposed on grid reliability (never mind the trillions of dollars in pollution, health, and climate costs from coal and natural gas — in the United States alone).
The real subsidized costs
However, the eventual findings by career staff should surprise no CleanTechnica readers: coal and nuclear power are the ones that are no longer competitive.
“The release of the study has been delayed several weeks — and the findings in the draft might explain why,” Think Progress, which obtained a copy of the draft report, wrote.
“The draft report finds that since 2002, ‘most baseload power plant retirements have been the victims of overcapacity and relatively high operating cost but often reflect the advanced age of the retiring plants.’
“Overcapacity is a major cause of the turmoil in electricity markets. The report explains that because the growth in electricity demand has flattened since 2008, it is harder for ‘less competitive plants’ to survive. …
“And it doesn’t make sense to keep an uneconomic plant running when you know it’s going to keep losing money.
“In the case of nuclear power, the study notes that vast majority of the plant closure announcements blame plant retirement on ‘unfavorable market conditions.’ And the ‘most unfavorable condition is that the marginal cost of generation for many nuclear plants is higher than the cost of most other generators in the market.’
“Similarly, coal is also hurt by its high marginal cost: ‘[Coal] plants that have retired are old and inefficient units that were not recovering their operations and fuel costs, much less capital cost recovery.’”
To repeat: if old coal and nuclear power plants can’t even compete on today’s grid because of the relatively high cost of fuel and operations, how in the world could new nuclear and coal compete? They can’t.
But… what about when the wind doesn’t blow?
For the anti-renewables confusionists who love to talk of 90–95% capacity factors for nuclear and coal, the study has another fun and enlightening finding. Because of the uncompetitive nature of these options (just to operate, let alone build), they actually run at much, much lower capacity factors.
“The DOE draft reports that a detailed analysis found ‘about 70 percent of the [coal] plants that have retired between 2010 and 2016 had a capacity factor of less than 50 percent in the year prior to retirement.’”
Honestly, though, the Trump administration didn’t need to conduct a study to figure all of this out. The newbies there could have called up executives at a US corporate giant, GE, to have gotten an update on the energy world. GE has long been a manufacturing leader in nuclear power plants, gas power plants, and wind power turbines. As Chris Varrone wrote in 2011 on CleanTechnica, “GE wants to sell you everything.”
The thing is, GE is now heavily focused on wind because wind is the most cost-effective option on the market.
I sat down with John G. Rice, vice chairman of GE, in January right after GE won the 2017 Zayed Future Energy Prize in the Large Corporation category. (Full disclosure: Masdar covered my conference transport and accommodation, and I’m now on the Zayed Future Energy Prize Review Committee.) In the video interview above, you can see John chat about the growing efficiency and cost-competitiveness of wind power in the developed and developing world — that’s one of the energy stories of the century, and the DOE should know this by now.
Coming back to my comments at the very top of the article, it’s interesting (and telling) that Mr. Rice highlighted almost the exact same points. He noted that wind power costs today are one-third to 25% of what they were 10–15 years ago — that’s a tremendous cost drop in a short period of time. It’s easy for someone who learned a little bit about wind energy in 2000 or 2005 to think he knows the story, but if he hasn’t learned much about the economics of energy since then, he may have drastically incorrect assumptions in his head about why wind power is so common today and the role policy does or doesn’t play in its continued growth.
Sure, wind power is about saving the world, but it’s also just about saving cash (and in GE’s case, making money). Furthermore, in order to maximize total electricity output to the grid and grow the financial benefit of wind power, wind turbines are increasingly incorporating storage. Even renewable energy + energy storage is becoming more competitive than fossil fuels. Why would we go backward to an era of more expensive, dirtier, dumber tech when we could keep flying forward with wind power and solar power?
If the Trump administration and Republican Party were really business friendly, they’d consult with industry leaders like GE and learn what John G. Rice emphasized to CleanTechnica in January. They wouldn’t try to pull the country backward in order to save some old oil, coal, and gas billionaires and millionaires money that they don’t really need or even use. These political “leaders” would be stimulating quicker growth in the energy industries of the 21st century — wind energy, solar energy, and energy storage.