Too Many Energy Discussions Ignore Prices
Far too often, articles about energy policy fail to mention prices. Not only do many renewable energy advocates ignore the question, but it sometimes seems as if prices for the output from large scale wind and solar installations can only be discovered by Russian hackers. Announced deals rarely mention prices and it is difficult to find the information on the internet, either on regulatory commission or utility websites.
It’s hard to know how much this is willful ignorance of the uncompetitive nature of most renewable energy, underlying ignorance of basic economics or a desire to obscure the high costs involved. Past posts on the subject have found numerous comments that confuse the cost of power with the prices being paid in some instances, such as when short-term market prices go negative due to unusually high generation of wind power in Germany.
Long-time energy efficiency advocate Amory Lovins says Americans saved energy in the late 1970s until 1986, when they stopped “paying attention”. Coincidentally with the collapse in oil prices. Of course, he first came to attention in the 1970s combatting the then-prevalent idea that energy conservation was impossible, that energy demand would grow in lockstep with economic growth, but he relied on his engineering background to note that substantial savings were technically possible, which was correct. Since energy prices had risen sharply, the economics were generally favorable and could be taken for granted, but that changed with lower energy prices. Lovins’ promotion of the very efficient but very expensive Hypercar underlines his disregard for economics.
The problem is apparent at both the national and individual levels. Any number of writers praise the “success” of Germany’s renewable energy program without talking about the cost (or prices). Bjorn Phillip Beer writes about the “the Secret Behind Germany’s Clean Energy Success” which he believes is the low level of contributions to politicians from the fossil fuel and utility industries. This he blames for slowing the adoption of renewables in the U.S. He mentions price only in saying “…renewables aren’t paid for by direct subsidies (i.e. taxes), but are instead spread out over the entire electricity market and onto consumers.” Similarly, “Ten Myths about Solar Power Busted” doesn’t mention price or cost—perhaps because they aren’t myths.
Far too often, articles about energy policy fail to mention prices. Not only do many renewable energy advocates ignore the question, but it sometimes seems as if prices for the output from large scale wind and solar installations can only be discovered by Russian hackers. Announced deals rarely mention prices and it is difficult to find the information on the internet, either on regulatory commission or utility websites.
It’s hard to know how much this is willful ignorance of the uncompetitive nature of most renewable energy, underlying ignorance of basic economics or a desire to obscure the high costs involved. Past posts on the subject have found numerous comments that confuse the cost of power with the prices being paid in some instances, such as when short-term market prices go negative due to unusually high generation of wind power in Germany.
Long-time energy efficiency advocate Amory Lovins says Americans saved energy in the late 1970s until 1986, when they stopped “paying attention”. Coincidentally with the collapse in oil prices. Of course, he first came to attention in the 1970s combatting the then-prevalent idea that energy conservation was impossible, that energy demand would grow in lockstep with economic growth, but he relied on his engineering background to note that substantial savings were technically possible, which was correct. Since energy prices had risen sharply, the economics were generally favorable and could be taken for granted, but that changed with lower energy prices. Lovins’ promotion of the very efficient but very expensive Hypercar underlines his disregard for economics.
The problem is apparent at both the national and individual levels. Any number of writers praise the “success” of Germany’s renewable energy program without talking about the cost (or prices). Bjorn Phillip Beer writes about the “the Secret Behind Germany’s Clean Energy Success” which he believes is the low level of contributions to politicians from the fossil fuel and utility industries. This he blames for slowing the adoption of renewables in the U.S. He mentions price only in saying “…renewables aren’t paid for by direct subsidies (i.e. taxes), but are instead spread out over the entire electricity market and onto consumers.” Similarly, “Ten Myths about Solar Power Busted” doesn’t mention price or cost—perhaps because they aren’t myths.
Searching for “germany renewables” on thinkprogress.org, a liberal website, finds that five of the first eight stories are about the amount of energy produced by renewables, and no mention of price or cost. Indeed, a post by Arne Jungjohann attributes the success to the fact that “Germany’s Renewable Energy Act provides certainty that manufacturers and investors are looking for.” He notes that the feed-in tariff was just increased, but doesn’t mention what it is—or that Germany electricity prices are very high. And other stories which do mention prices add in the point that wholesale electricity prices are dropping, which reflects imbalances in the market due to volatile renewable energy, not lower costs. Jeff Spross noted the high price, correctly attributing it to the renewable surcharge, but only to say that it was dropping, from 6.24 euro cents/kwh in 2014 to an expected 6.02 in 2016 (based on industry projections. The actual, unfortunately, proved to be 6.35 this year and is projected to rise 8% per year next year.
And most stories about specific projects or technologies seem to ignore the question of price and economics. One favorite is the article which describes how installing a solar panel and Powerwall system enabled one consumer to save $13,000 a year. He expects to “start seeing a return” in 4-5 years. Apparently the author means the system cost about $50,000, including tax breaks and/or subsidies but the information is not provided. It’s not unlike a company that extols the revenue from an oil field with mentioning the development cost.
