…A Glimpse at Fake Energy News…
The Wall Street Journal (WSJ) represented the gold standard for truth and accuracy. Unfortunately, it has joined the many publications that have allowed journalistic standards to erode.
Twice over the past three months, the WSJ published articles that were misleading. In early September, it published Wind Power Wins Converts in Rural U.S. In mid-December, it published, by the same reporter, Power Shift Drives a Slide in Prices.
The latest article was actually published twice by the WSJ: First in the Markets Section in late November, under the title Electricity Prices Plummet as Gas, Wind Gain Traction and Demand Stalls, then, again in December, on the front page.
The most recent article made three claims:
- Competitive power markets result in low prices
- Wind and solar are competitive with coal, natural gas combined cycle (NGCC) and nuclear power plants
- Demand for electricity has not grown
Let’s look at each of these subjects.
Competitive power markets result in low prices
The inference is that the markets run by RTO/ISOs result in low consumer prices for electricity based on competition among suppliers.
But, this is misleading.
Obviously, everyone wants to use the lowest cost electricity.
Here are the facts.
The auctions run by the RTO/IISOs use the lowest variable cost when selecting suppliers of electricity, where the lowest variable cost will virtually always be from wind or solar because they have no fuel costs.
In other words, the full cost of generating electricity is excluded from the bid price of winning bids in the auctions conducted by RTO/ISOs.
A market based on a method that excludes full costs will drive all suppliers into bankruptcy except those that have no fuel costs.
The so-called competitive market is a rigged market favoring wind and solar to the exclusion of coal-fired, NGCC and nuclear power plants.
It’s the reason nuclear power plants are being retired before the end of their useful lives. This is explained in the book, Keeping the Lights On at America’s Nuclear Power Plants, published by Hoover Institution Press.
For more on these so-called competitive markets see, The Market for Electricity is Rigged
Wind and solar are competitive with coal, natural gas and nuclear power
All three of the articles written by this reporter cite an analysis by investment bank Lazard claiming that wind and solar are competitive with traditional methods for generating electricity with their levelized costs of electricity (LCOE) lower than for coal, NGCC and nuclear power plants.
A closer look at this claim raises serious questions about the Lazard study.
An important component of the Lazard study is their use of Capacity Factors (CF) based on resource availability.
(Capacity factor represents the amount of electricity a plant actually produces compared with the amount it can theoretically produce based on its nameplate rating.)
In other words, the CFs used in the study were ersatz. The study used a CF of 55% in one instance and 38% in another.
These were higher than any CF used by the Energy Information Administration (EIA) in their determination of LCOEs for the latest land based wind installations prior to 2017.
For more detailed information on the Lazard study see, Misleading Costs for Wind and Solar
The Lazard LCOEs also didn’t appear to take into consideration the intermittency and unreliability of wind and solar. These add substantial costs: For eample, to provide backup power for when the wind stops blowing or the sun stops shining, and to add huge amounts of expensive storage.
For more information on the cost of storage see, Understanding Storage of Electricity, Quantities and Costs
Demand for electricity has not grown
It’s true that demand for electricity has stalled over the past few decades, but this has exacerbated the problems we now confront with grid reliability and costs.
Government actions have encouraged adding wind and solar to the grid, which has contributed to excess supply.
Wind and solar can’t rightfully be considered part of reserves since they are intermittent and can’t be relied on should there be a surge in demand or a failure somewhere on the grid.
It makes no sense to add unreliable excess supply to the grid, unless there is a hidden agenda.
Summary
Media articles, such as those in the WSJ, are misleading their readers about the cost and reliability of wind and solar.
Our system, generally referred to as the grid, used for generating and distributing electricity to consumers is complex, and it’s easy to spin myths about wind and solar without people recognizing the fallacies in the stories.
The media almost always exaggerates the benefits of wind and solar while misleading people about costs and reliability.
Wind and solar are actually causing serious harm to the grid.
For more about this vital subject, see Why are we Destroying the Grid
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Donn, I was at the quarterly meeting of the ISO-NE Consumer Liaison Group yesterday. (I am on the Coordinating Committee for that group.) Anne George of ISO-NE gave an update from the grid operator’s point of view. I link to her talk, here. https://www.iso-ne.com/static-assets/documents/2017/12/clg_meeting_george_iso_update_presentation_december_7_2017_final.pdf
In New England, we have two auctions: an electricity auction (kWh) and a Forward Capacity Auction (kW installed, basically). The Capacity payments and auction are supposed to ensure that adequate capacity exists to generate the kWh needed.
On slide 18 of George’s presentation, you can note that the Forward Capacity Auctions are attracting new bidders, including renewables. Now, there is no reason why a biomass plant shouldn’t bid into the Capacity Auction, but wind is more problematic. Is wind on the grid actually available for capacity? Can it displace other capacity? I am not the first to ask this question. Wind Capacity Value (or Capacity Credits) is a very lively topic now, in academia and in ISOs. Here’s a recent Ph.D. dissertation on the subject. In this document, Capacity Value is defined in section 1.1. http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1486&context=dissertations_2
Back to the ISO-NE meeting yesterday. Right after her presentation, I asked Ms. George what metrics ISO-NE uses to have wind bid in to the capacity markets, at what capacity value? I tried to make my question very clear, mentioning value and capacity factor and explaining them. I do not feel I got an adequate answer. (What I should do is follow up with Ms. George by email, I think…).
Back to the general question. How should wind plants bid in to capacity markets? An open question.
Thanks. This is an extremely valuable comment.
Whether wind should be included in the reserve calculation is vitally important.
From your comment, it’s clear there is an effort underway to have wind be included in reserves using a capacity value for wind.
This, in my view, borders on insanity.
I can understand why the advocates of wind energy would try to plug this hole in wind reliability, because wind can’t be relied on. Instead they are making a theoretical academic argument that wind can be quantified somehow to allow it to become part of a known amount of capacity.
One need only to look at the event reported by the New York Times where, on a hot summer day, there was virtually no generation from wind turbines because of the doldrums created by the hot weather, at the same time air-conditioning load was peaking.
If it hadn’t been for a few coal-fired power plants that hadn’t yet been shut down there would have been a blackout caused by the unreliability of wind.
It’s not possible to predict when this type of weather event will happen.
The paper by Professor Letson is worth reading. I’m still digesting all the ideas contained in the paper, but including wind as part of 100% reliable capacity to support the political agenda of wind advocates is a mistake.