Mystery Solved: Unreliable Wind & Solar Primary Reason For Rocketing Power Prices

That heavily subsidised and chaotically intermittent wind and solar are driving power prices into orbit has been proved beyond all reasonable doubt.

No country that ‘invested’ in the unreliables (ie threw $millions in subsidies at wind and solar) has ever seen their retail power prices fall. No, the evidence on that score is all to the contrary.

In Europe, wind and solar ‘powered’ Germany and Denmark jockey for top spot on the power prices league table. Australia’s renewable energy capital, South Australia set the benchmark down under for crippling power prices years ago and its denizens still pay prices well above their coal-fired neighbours.

It’s no mystery, really.

The cost of additional transmission lines running from the back of beyond; the staggering cost of running highly-inefficient Open Cycle Gas Turbines (or diesel fuelled ship engines) to cope with total collapses in wind and solar output; and running traditional coal-fired power plants inefficiently – all add up and power consumers get whacked for every last cent of it.

As to coal-fired power plants, the subsidies to wind and solar mean they can’t dispatch power to the grid according to consumer demand (the subsidies allow wind and solar operators to underbid them) but they are still required (by government directions) to remain online and burning fuel, ready to dump power back into the grid whenever the sun sets and/or calm weather sets in – what’s called ‘spinning’ reserve.

The mandates, targets and massive subsidies to wind and solar were designed to wreck the business model of reliable generators, which they have duly done. Now, it’s households and businesses that are left to suffer the consequences.

Sky’s Chris Kenny takes up the topic with Bjorn Lomborg.

Lack of ‘base load power’ is leading to massive energy price increases
Sky News
Chris Kenny and Bjorn Lomborg
23 August 2022

Copenhagen Consensus President Bjorn Lomborg says the world has tried to introduce renewables to the grid without having enough baseload power to support it.

Europe’s renewable energy push has made power prices increasingly high with the nations retiring too much baseload generation, mainly coal, and pushing too hard on boosting renewable energy.

“We hear a lot about heat deaths and that’s a real problem, what we don’t hear is many more people all across the world die from cold” Mr Lomborg told Sky News host Chris Kenny.

“Now if the prices goes through the roof it’s very likely people won’t be able to heat their homes as well and that will mean many more people dying from cold”.

Transcript

Chris Kenny: Yesterday, we had a look at what was happening in Europe’s energy crisis and if you want to see where we’re headed, you can do no better than look at what’s happening in Europe at the moment. Most European nations have retired too much base load generation, mainly coal, and pushed too hard on boosting renewable energy. It can’t do the job and simply never will. Here’s the latest from global news on what’s unfolding in Britain.

News Announcer: Five out of every six homes in Britain use natural gas for heating and 40% of the electricity is generated using gas. Although almost none of that comes from Russia, the spiking global market for gas is still driving up UK utility bills from $2,000 a year for the average home to as high as nearly 8,000 by next spring. Some European governments like France and Italy are capping such increases. The UK is instead offering rebates. But analysts say those measures are nowhere near enough to help the poorest.

Stephen Jarvis: If those bill increases go through for this coming winter, more than half of the entire country will be classed as being in energy fuel poverty. That’s how extreme the rises are.

News Announcer: In the UK, fuel poverty is where more than 10% of household income goes to energy.

Chris Kenny: And as usual, of course, it’s those on the lowest incomes who’re going to suffer the most from this stuff. Now, to discuss this and more, I’m joined by Copenhagen Consensus president, Bjorn Lomborg. His latest book is False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet. Thanks again for your time, Bjorn. This must be just astonishing to see the way the energy crisis is unfolding at the moment in Europe. Of course, the Ukrainian war and the constrictions on Russian gas supplies is playing a role, but there’s so many other factors involved, especially the way European countries have deliberately undermined the reliability of their own energy supplies.

Bjorn Lomborg: Yes, Chris. Absolutely, the Ukrainian war is playing a big role right now. It’s put this at a head. But fundamentally, the problem is that we’ve tried to go a lot renewable without actually having, as you pointed out, the base load power to back it up. We use gas for that and since we’ve decided we didn’t want to go fracking ourselves, which of course, has given the US lots and lots of gas very cheaply, we’re now in a position where we have to pay very high prices for gas. This is going to be much worse coming into the next winter. It’s likely right now. The German one year head prices are now an exorbitant, almost 60 US cents per kilowatt hour. It’s never been this high and it’s going to fundamentally stress Europe, possibly even destroy Europe. This is very serious and I don’t think we have any sense of how hard it’s going to be. This is mostly because we decided to go a lot renewable.

Chris Kenny: Exactly. Too much reliance on renewables, not enough reliable energy. The poor will suffer the worst and it’s not an exaggeration. In fact, it would be a reality, would it not, that going through this winter, this is going to cost people their lives.

Bjorn Lomborg: Oh, absolutely. Look, we hear a lot about heatwave deaths and that’s a real problem, but what we don’t hear is that many more people all across the world die from cold. About nine times more people die from cold than from heat. Of course, people die from cold because they can’t keep their homes heated. Now, if the price goes through the roof, it’s very likely that people won’t be able to heat their homes as well and that will mean many more people dying from cold. I’m curious to the fact, for instance, we heard a lot about Britain and last month, when they had huge heatwave spikes, possibly more than a thousand people died from heat. But we don’t hear the fact that every year in Britain, 60,000 plus people die from cold. Surely, we need to hear both and we probably should hear about 60 times more about the cold deaths. We don’t. That’s one of the reasons why we have such problems getting our policies right.

Chris Kenny: Look, it’s just heartbreaking to think of those people on fixed incomes, scrimping on their heating over winter because they can’t afford the power bills. But talk about the economic opportunity cost of all this, because what’s happened in countries like Britain and Spain and Germany and Australia, we’ve spent an enormous amount of government money subsidising renewables and that’s made our electricity more expensive, which has cost us jobs and other opportunities. And now, the cost to consumers is getting so high, they’re talking about governments paying rebates back to consumers to pay more money to try and reduce the cost of their electricity. It’s just money chasing money with no productive outcome.

Bjorn Lomborg: Yeah. Partly, it will be unsustainable because most governments in Europe won’t be able to afford to pay this much. But of course, the whole point of the price signal is to reduce consumption. If you then subsidise the price, you’re essentially getting more of that problem. But fundamentally, what this tells us is we need to be realistic about the policies that we pursue. First of all, Europe, despite the fact that it tries to be a leader on climate impact, remember, it still just gets 3.4% of its energy from solar, wind, and all other renewables apart from biofuels. Fundamentally, Europe has not succeeded except in making itself very vulnerable. One way that it could have dealt with this is by focusing much more on fracking. Remember, in the US, they basically delivered on fracking which both gave huge environmental benefits and huge economic benefits.

Bjorn Lomborg: Fracking basically releases a lot more gas availability at very low cost. Gas emits about half as much CO2 as does coal. And so, switching from coal to gas not only delivers a huge reduction in CO2, the US has had the largest reduction of any nation in the world over the last 10 years because of fracking, but it also delivers much greater productivity because you get cheap electricity. Remember, the US is also seeing increase in gas prices, but much less than what Europe is doing, basically because that is fracking. And it would save people. There was a study that showed of the people who were heated with gas, which is not all that many, it’s about a third in the US, it showed that because fracking made gas cheaper, it meant people heated their homes better. That saves on average every year 11,000 people from dying or to put it differently, if you don’t frack, you have 11,000 more people dying every year.

Chris Kenny: Yeah, fracking. Gas generation also works in with renewables very well, because it can ramp up and ramp down very quickly. Just very quickly, Bjorn, I have to get your thoughts on this similar vein, nuclear. There was a big push to start drawing down on nuclear energy post-Fukushima, but France is now looking to expanding it and surely, the rest of Europe will be doing the same.

Bjorn Lomborg: Yes. Fortunately, Germany stupidly decided to phase out nuclear power. Although it’s not dangerous, you’ve already incurred most of the cost, it generates a lot of CO2 free electricity. They’ve now said at least they’re going to save the last three. Nuclear is not the saviour in the current form, because third generation, the current generation, is still very expensive, but fourth generation nuclear holds lots of promise and we should definitely be investing a lot more in making sure that, that becomes the reality not just for Europe, but for Australia and for China, India, and Africa.

Chris Kenny: Africa, South America, the works, yeah. Thanks so much for joining us, Bjorn. Really appreciate it.

Bjorn Lomborg: Thank you.

Chris Kenny: Bjorn Lomborg just talked so much sense on these issues. It’s about getting your priorities right and spending your resources well.
Sky News