Saturday, November 7, 2020

Danish author: The myths of renewable energies

 Danish author Björn Lomborg of think tank Copenhagen Consensus Center considers renewable energies an eyewash. Neither are they low in price nor do they contribute to halt the climate change. He develops some interesting arguments in german newspaper WELT:

Are Renewable Energies Competitive? We hear constantly that wind and solar energy are conquering the world. They are free and - we are told - cheaper than fossil fuels. But why is Germany spending 18 billion euros this year on subsidizing solar and wind energy? In the current discussion about renewable energy, a little is actually true and a lot is misleading.

Technically speaking, it's true that an extra kilowatt-hour of electricity generated by the cheapest and most effective new wind and solar systems is cheaper than fossil fuels. In Germany, according to the Fraunhofer Institute, these best-case technologies generate an average of one kilowatt hour of electricity for 5.2 cents for solar and 6.1 cents for wind energy. Compared to the average price of a new lignite power station that produces a kilowatt hour for 6.3 cents, it seems absolutely logical to build more and more wind and solar systems.

But solar power is only generated when the sun is shining, wind power only when the wind is blowing. No sun, no wind, no electricity. When it is dark and there is no wind, the price of wind and solar power increases immeasurably.

In reality, the wind turbine and solar panel are only the visible part of the cost of renewable energy. But we also have to pay for the entire rest of the energy system to balance out the only temporarily available solar and wind energy.

It works in a number of ways. To compensate for the additional uncertainty, society has to bear costs that make solar and wind energy somewhat more expensive, probably by less than half a cent per kilowatt hour.

The feed-in is a well-known problem: Most of the wind energy comes from the north of Germany, the majority of the solar energy from the south. This requires large transmission lines, which in turn make solar and wind energy a little more expensive, perhaps by half a cent to one cent per kWh.

The highest cost, however, comes from the fact that all of the solar and wind power mostly arrives at the same time, making it far less valuable. It is not surprising that photovoltaic systems only provide electricity during the day, mostly around noon.

It is good if you get a few percent of the electricity from solar energy, because this way extra electricity is supplied at peak consumption times. In fact, the few German solar modules generated valuable midday electricity in the early 2000s, which achieved 30 percent higher prices per kilowatt hour compared to the average electricity price from mainly coal, gas and nuclear power.

However, as more and more solar systems are being built, the market is being flooded with increasingly worthless solar energy. Compared to the average electricity price, German solar systems have been selling their electricity with ever increasing losses since 2013. Studies show that the value of solar energy, if it produces 15 percent of all electricity in Germany, amounts to half of the average electricity price.

Similarly, wind power is typically generated at the same time and often arrives at night when it is of little value. Since 2001 at the latest, German wind power generators have been selling their electricity below the average electricity price, and the loss is increasing.

When wind power reaches 30 percent of the market, much of the electricity will have little or no value. Compared to the average electricity price, the value drops by a third and loses two cents per kilowatt hour.

Wind energy therefore needs a subsidy of an additional two cents per kWh compared to the average electricity price for coal, gas and nuclear energy, only to compensate for the fact that it is produced at the same time and often when it is of little use.

One might think that it would be great for society when electricity prices fall - but keep in mind that this cut only applies to solar and wind energy because much of it is produced when it is not needed.

Ironically, this makes the rest of the electricity system more expensive. A coal-fired power plant that could have run year round is now often shut down and has to be inefficiently ramped up and down to use solar and wind energy.

That means higher electricity prices when the power plant is running. Electricity production is being shifted to more flexible gas-fired power plants, which, however, are also more expensive. While power plants can produce electricity around the clock for around six cents / kWh, peak production can end up costing 400 cents / kWh.

It's like being told that we can get cheap, self-driving solar taxis for all of Germany. The only problem: Unfortunately, they only work effectively on sunny days between 9 a.m. and 3 p.m.

The rest of the time, the old taxis still have to drive. Although the new taxis are cheaper, we now have to pay two taxi companies. And the normal drivers have to raise their prices because they have to make a living in fewer hours.

That's why solar and wind power only appear to be cheaper. Solar energy is technically capable of producing a new kilowatt hour for 5.2 cents, but this is associated with additional costs.

It costs extra to get a handle on variability and feed. And because the electricity arrives at the same time, it essentially needs a two-cent subsidy just to be comparable to coal, gas and nuclear power.

For this reason, studies show that the total hidden costs with significant generation of solar and wind energy are 2.5 to 3.5 cents / kWh. In fact, new solar and wind turbines are only likely to cost around half their current best price before they are actually cheaper than fossil fuels.

It's great that renewable technologies are getting cheaper, but they are still far from cheap enough. Electricity prices have dropped dramatically over the last century as technologies became more effective.

But this century we have driven up costs as we increasingly insist on using expensive and weather-dependent renewable energy. For this reason, the higher the proportion of wind and solar energy, the higher the electricity costs for households across Europe.

In the first half of 2020, German households will again pay the highest electricity prices in the world. And German wholesale electricity prices could quadruple again by 2030.

To promote renewable energy, politicians around the world are impatiently increasing subsidies. Germany will spend 24 billion euros on funding this year through the EEG, after spending around 200 billion euros since 2000 through the EEG surcharge alone.

One estimate puts the total costs of the energy transition for the first quarter of this century at 520 billion euros. As a result of the energy transition, the average available German income is almost two percent lower every year than it would have been without it.

Across the EU, the additional costs for solar and wind energy amounted to an astonishing 55 billion euros in 2018. Worldwide, the International Energy Agency estimates that subsidies for solar and wind energy will amount to more than $ 5,000 billion between 2007 and 2040. Although the energy transition has broad public support, three quarters of the population consider it expensive.

For Germany, the EU notes that spending on renewable energies has increased dramatically. Overall, though, it's a terrible deal. In the past eight years, cheaper renewable energies have reduced German electricity costs by around 0.4 cents per kWh. Unfortunately, the subsidies have also increased electricity costs for the average consumer by 6.4 cents per kWh.

Many believe that one solution is electricity storage. But that only solves part of the problem for the few countries that have a lot of hydropower, such as B. Sweden. You can use hydropower as a battery to cut the added cost of renewable energy - by damming water behind dams while using wind and solar power, and releasing the stored hydropower through generators when the sun and wind are weak.

Today's batteries are far too small and too expensive. The entire battery storage system in Germany could currently cover the average German electricity consumption for 89 seconds. A sensible addition to solar storage ideally triples the costs, but can also exceed ten times the costs.

But do renewable energies at least reduce CO₂ emissions? Yes, the massive investments in solar and wind energy reduced German CO₂ emissions by 118 million tons in 2019. But these cuts alone will lower global temperatures by less than half a ten-thousandth of a degree by the end of the century - at a cost of 18 billion euros.

Even if this were to be continued for more than half a trillion euros over the next thirty years, the temperatures would drop by a little more than a thousandth of a degree. Every euro is badly invested because only the equivalent of 19 cents in long-term, global climate damage is avoided.

In addition, the German attempt to reduce CO₂ in power generation ignores the EU trading system, which already has fixed goals. Additional savings by Germany only mean that more certificates are left for other countries without reducing the total amount of CO₂. The only real benefit of the German savings are lower climate policy costs for other countries. The impact on the climate is actually zero.

The energy transition is often cited as an example for the world. Obviously, Germany cannot fix climate change on its own, but if this policy could inspire others to act wisely, it could do a tremendous amount of good.

But if at all, Germany has not been a role model to follow, but rather a warning: after spending hundreds of billions, it still gets less than five percent of its total energy (not just electricity) from sun and wind. It's not sustainable.

This is mainly due to the fact that the energy transition mainly invested in yesterday's technology. Technology that we know is far from being cost-effective. This will not convince anyone, especially not in the poorer parts of the world.

What we need are better technologies to produce future green energy cheaper than fossil fuels. For example, we need wind and solar energy, which is considerably cheaper than today (to cover the hidden costs), incredibly cheaper energy storage, much cheaper nuclear energy or extremely cheap CO₂ capture.

Or some other amazing green technology. We are far from making these breakthroughs. And because there are many voices that say we will be there soon, trillions are wasted in the world right now. As Bill Gates says, "We are missing about two dozen great innovations" to address climate change.

Germany should take on a pioneering role, not through wasteful spending on ineffective technologies from yesterday, but through innovative solutions for tomorrow: Investing in research and development to make future green energy technologies cheaper than fossil fuels.

Not only will it cost less, it will work better and actually help convince everyone in China, India and Africa to eventually switch too.

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