High Costs of Alternative Fuels Discussed

Published May 1, 2017

Speakers at the 12th International Conference on Climate Change’s panel on the Cost of Alternative Fuels concluded alternative fuels come with high costs for limited benefits.

The panelists included Mary Hutzler, a senior fellow at the Institute for Energy Research (IER); James Taylor, president of the Spark of Freedom Foundation; and Benjamin Zycher, the John G. Searle chair at the American Enterprise Institute (AEI).

Hutzler’s presentation, “The Levelized Costs of Electricity (LCOE) from Existing Generation Sources,” utilized an IER study to compare the costs of new generation technologies.

IER’s study found the levelized cost of electricity from existing coal plants is $39 per megawatt hour; from combined cycle natural gas plants, $34.40 per MWh; from existing nuclear plants, $29.10 per MWh; and from existing hydroelectric plants, $35.40 per MWh.

Since most wind and solar installations have come into existence only recently, neither the government nor IER calculated their existing levelized costs.

Wind, Solar Cost More

IER compared the levelized costs of new natural gas, nuclear, hydroelectric, wind, and solar power sources. Coal was not included, because no new coal plants are planned, due to the high expense caused by government regulations. Hutzler reported the cost of new wind power is $107.40 per MWh and that of solar is $140.30 per MWh. Replacing existing coal or nuclear units with new wind or solar increases costs by 250 percent to 500 percent, according to the IER study.

Not only are the costs of recently constructed and planned new wind and solar generating units substantially higher than those of existing power plants, they are also higher than new natural gas and nuclear units, Hutzler said. New wind is 94 percent more expensive than new natural gas and 19 percent more expensive than new nuclear. Hutzler showed new solar to be 154 percent more expensive than new natural gas power and 56 percent more costly than new nuclear power. These figures do not include the cost of taxpayer subsidies or of transmission costs unique to wind and solar power.

“Everything new is expensive,” said Hutzler. “If it ain’t broke, you shouldn’t replace it.”

High Cost to Consumers

James Taylor, president of the Spark of Freedom Foundation, demonstrated the high consumer cost of replacing existing electric power plants with subsidized wind and solar.

In states with renewable-power mandates, electricity rates rose 50 percent faster than in states without them, Taylor said. For example, Colorado households are paying an extra $350 per year for electricity, and New Mexico households pay an extra $400 per year for electricity compared to what they would have to pay without the mandates.

Before 2006, coal and oil were the dominant sources of energy in the United States, because they were the lowest-cost fuels for electric power generation and transportation, respectively, Taylor told the audience.

“The 2006 and 2008 wave elections for Democrats changed the equation,” said Taylor. “Unfortunately, Democrats were more predisposed to restricting energy due to unsubstantiated environmental claims.”

Shortly thereafter, the federal government mandated a de facto 10 percent ethanol mandate for transportation fuel, and a majority of states passed renewable-power mandates.

Taylor said it is critical for lawmakers to consider energy costs and reconsider renewable-fuel mandates.

“It is very important we focus on affordable and abundant energy,” said Taylor. “When people advocate more expensive power sources, be it wind power, solar power, or what have you,… when we take money out of peoples’ pockets through higher energy costs, it means that money has to come from other things in life that make our lives happier, healthier, and longer lasting.”

Solar ‘Monstrosity’

Zycher’s presentation, “The Ivanpah Solar Power Monstrosity: A Case Study in Government Non-Creative Destruction,” described the high costs and environmental harms from California’s Ivanpah Solar power plant.

Zycher said Ivanpah paid fees of 88 cents per million British thermal units (MBtu) of energy produced using public lands, while receiving $285 per MBtu in subsidies, for a net cost to taxpayers of $284.12 per MBtu. By comparison, oil and gas producers pay $1.23 in royalties and other fees per MBtu, while receiving just 19 cents per MBtu in supposed subsidies, for a net gain to the Treasury of $ 1.04 per MBtu.

Zycher said taxpayers aren’t the only ones bearing the costs of Ivanpah, because the power it produces costs 200 percent more than comparable coal-fired power plants and 300 percent more than comparable natural gas power plants.

‘Environmental Destruction’

Beyond its high economic costs, Zycher said Ivanpah is causing environmental destruction.

“Ivanpah sits on a little bit less than 3,500 acres of fragile Mojave Desert, with an official production of 392 megawatts,” Zycher told the audience. “A 1,000 MW nuclear plant uses something under 100 acres, two 800 MW coal-fired generating units would consume about 800 acres—including railroad tracks and storage space—while a gas-fired combined cycle 1,000 MW plant would consume about 50 acres.”

In addition, observers sent by the U.S. Fish and Wildlife Service to calculate the impact of the solar farm on birds estimate the extreme heat reflected from Ivanpah’s solar mirrors to its central tower kills approximately one bird, called streamers as they catch fire and plummet from the sky, every two minutes.

“[Bird deaths,] it seems to me, [are] the only dimension of renewable electricity that’s actually reliable,” said Zycher.

Zycher also said under the best-case scenario the amount of greenhouse gases avoided by Ivanpah’s operations is less than one-thousandth of one percent of global greenhouse-gas emissions.

“The environmental advantages of unconventional, so-called clean energy are clear [only] if we ignore the environmental problems caused by unconventional energy,” Zycher said.

H. Sterling Burnett, Ph.D. ([email protected]) is a research fellow at The Heartland Institute.