Renewable Energy Does Not Raise Electric Rates

It is an article of faith of conservative economists that renewable energy raises electric rates and causes economic distress. To make their case, they produce detailed analyses, such as Ref (1), based on cost assumptions.

 

The acid test of the effects of renewable energy is its actual effect on actual electric rates. I have previously shown that electric rates, as well as unemployment rates, are independent of the amount of renewable energy produced in a state (2). Those were 2016 data. The 2017 data are now in (3) and are consistent with earlier data. With the exceptionof traditionally expensive states (Alaska, Hawaii, and New England) the data lie in a narrow band, confirming that renewable energy does not raise electric rates.

 

References

(1) Orphe Divounguy, et al., Economic Research Center Analysis: The Impact of Renewables Portfolio Standards on the Ohio Economy, The Buckeye Institute, March 3, 2017 https://www.buckeyeinstitute.org/library/doclib/The-Impact-of-Renewables-Portfolio-Standards-on-the-Ohio-Economy.pdf

(2) Alan R. Rosenfield, LWVO Testimony on HB114 -RENEWABLE ENERGY STANDARDS, House Public Utilities Committee, March 21, 2017, https://drive.google.com/file/d/15GaqwwQqr692-UStmRxnYFF3hyt8Cbd-/view\

(3) Energy Information Administration, Electrc Power Monthly, Feb. 2018, https://www.eia.gov/electricity/monthly/archive/february2018.pdf

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Electric Vehicles Fight Climate Change

Electric vehicles can be a potent factor in combating climate change. Even though producing electricity for these vehicles creates CO2, electric engines are so much more efficient than internal combustion engines that there is an overall net decrease in greenhouse gasses compared to gas-driven vehicles. Proof is in my calculations posted at alanpeg.wordpress.com

Most of the discussion of greenhouse-gas reduction has focused on electricity generation, which is the largest source (1). However generation by transportation is not far behind (34% vs. 39%). The advent of electric vehicles (EV) provides a major opportunity to reduce carbon dioxide (CO2) emissions using current technology. As shown in the Appendix to this discussion, CO2 emissions would be reduced by about 1.51 billion metric tons of CO2 annually (about 28 percent) if all gasoline-powered vehicles were replaced with electric vehicles. This savings is far in excess of the approximately 400 metric ton decrease needed to meet the goals of the Paris Accords (2).

Such a drastic change would take many years, even if there were no barriers. For example, it is well known that ranges of gas cars are greater and refueling them is more convenient. But these handicaps should diminish with time. The critical question is overall cost.

On average, electric vehicles cost about $2,500 more than similar gas cars (3). But electricity costs are less than gas costs and the initial price difference is made up as miles pile up. However, the $7500 federal tax credit keeps electric vehicle prices artificially low. Only the two Tesla models are cheaper than comparable gas cars without the tax rebate (3). It is difficult to believe that the tax credit will survive if electric vehicles start to make a significant dent in gasoline usage.

Used electric vehicles are inexpensive (4), which means that they depreciate faster than gas cars do. The owner is selling a car with a used battery and the $7,500 tax credit no longer applies when the battery is eventually replaced.

In summary, both high initial cost and rapid depreciation are likely to be serious barriers to growth of electric vehicles.

References

(1)LLNL, Carbon Flow Charts, https://flowcharts.llnl.gov/commodities/carbon. The most recent is 2014.

(2) Michael Liebreich, Bloomberg New Energy Finance Summit, April 25, 2017, https://data.bloomberglp.com/bnef/sites/14/2017/04/2017-04-25-Michael-Liebreich-BNEFSummit-Keynote.pdf

(3) Zach McDonald, How Long Does It Take To Recoup the Extra Cost Of An Electric Car?, EV Industry; Green Fleet, June 16, 2016, https://www.fleetcarma.com/miles-recoup-cost-electric-car/

(4) Jim Gorzelany, Why You Should Consider Buying A Used Electric Car, Forbes, Septembe 18, 2017, https://www.forbes.com/sites/jimgorzelany/2017/09/18/why-you-should-consider-buying-a-used-electric-car/#3e3aa2af4383

 

APPENDIX – CALCULATIONS

Car Mileage

Gas

U.S. fleet average is about 25 mi/gal (A-1), with the average energy provided by one gallon of E10 being about 120,000 BTU (A-2), which equals 126 MJ (A-3). Putting everything together, gasoline-powered cars require about 5 MJ of energy per mile.

Electric

Electric vehicles are rated in kWh/100 mi. The average is about 30 kWh/100 mi (A-3). Since one kWh is 3.6 MJ, electric cars require abut one MJ of energy per mile.

Summary Electric cars require 1/5 of the energy that gasoline cars do.

Overall Changes

U.S. Energy consumption is reported in a very large energy unit – quads or quadrillion BTU (A-5). Total U. S. energy consumption is 97.3 quads. Transport uses 27.9 quads, which are from fossil fuels. Since electric cars are 1/5 as energy intensive as gas cars, a complete switch to electricity would lower this amount to 1/5 the current value, or 5.6 quads, giving a decrease of 22.3 quads or 23 percent in total energy consumption. Electricity generation, now 37.5 quads, would have to rise by 5.6 quads, or about 15 percent.

Total carbon dioxide (CO2) emissions are 5.41 billion metric tons (A6). Switching to electric cars eliminates the 1.83 billion metric tons CO2 produced by gasoline. But the 15% added release in electricity is estimated at 0.3 billion metric tons (A-7), for a net decrease of 1.5 billion metric tons or 28 percent of CO2.

Notes

(A-1) Reuters, U.S. vehicle fuel economy rises to record 24.7 mpg: EPA, January 11, 2018, https://www.reuters.com/article/us-autos-emissions/u-s-vehicle-fuel-economy-rises-to-record-24-7-mpg-epa-idUSKBN1F02BX

(A-2) Data from:Alternative Fuels Data Center – Fuel Properties Comparison, https://www.afdc.energy.gov/fuels/fuel_comparison_chart.pdf

Greenhouse Gas Decreasing in Ohio – II

Revised – 2 May 2018

My previous blog posting was based on a report that carbon dioxide (CO2) produced by electric plants in Ohio was reduced by 38 percent between 2005 and 2015 (1). To bring the data up to date, I shifted the time frame to 2008-2017 (a) and showed that Ohio’s production and consumption were about the same in 2008. Since then production has fallen faster than consumption and Ohio has become a net importer of electricity. It is not surprising that CO2 production has fallen in view of our heavy dependence on fossil fuels.

The decrease in electricity generation starts with coal. Plant retirement in the past nine years has reduced coal capacity by about thirty percent (2) and the remaining plants are running only about half time (2,3). As sown below, the shortfall has been replaced by natural gas, imports from other states, and a decrease in demand (4).

Since 2008 CO2emissions in Ohio have decreased by about 49 million metric tons, or about 39 percent (b)(5). This decrease has the following components in million metric tons (mmt):

Coal = -59 mmt

Natural Gas = +10 mmt

it is also possible to see what has replaced the 48 mmt emissions due to coal.

  1. Since natural gas only produces 40% of the CO2 as coal, the 10 mmt from natural gas are replacing 25 mmt from coal, for an net reduction of 15 mmt.
  2. Decreased demand saves 8 mmt of CO2 (c)
  3. Using imports save the balance, 25 mmt of CO2

The biggest driver in greenhouse gas reduction is less use of coal. Ohio’s situation is improved considerably by importing electricity from out of state, which is approaching 20 percent of demand (4).

Notes:

(a) Dating from passage of electric deregulation in 2008 (127-SB221)

(b) Actual 2015 CO2 data have been extrapolated to provide 2017 estimates.

(c) Regression analysis of data from Ref. (4) shows that Ohioans are reducing usage by about 0.9 million kWh per year or a total of about 8 million kWh over the nine year period. Comparison of Refs. (4) and (5) shows that coal produces one metric ton of CO2 for each kWh of electricity generated while natural gas produces about 0.4 metric tons..

References:

(1) EDF This Midwestern state is the surprising standout on cutting carbon pollution, Jan 4,2018, http://blogs.edf.org/energyexchange/2018/01/04/this-midwestern-state-is-the-surprising-standout-on-cutting-carbon-pollution/

(2) EIA Electric Power Industry Capability by Primary Energy Source, 1990 through 2016, https://www.eia.gov/electricity/state/Ohio/

(3) EIA, Electric Power Monthly, Jan. 2017, https://www.eia.gov/electricity/monthly/

(4) EIA, Electricity Data Browser, https://www.eia.gov/electricity/data/browser

(5) EIA, State Carbon Dioxide Emissions Data https://www.eia.gov/environment/emissions/state/

Subsidizing Old Technology

Both state and federal governments are planning to subsidize old coal and nuclear plants. These subsidies will cost you and me money. The Ohio plans are the further advanced. Our legislature is currently considering adding $30 per year to our bills in Central and Southern Ohio in order to allow two 60-year-old coal plants (one in Indiana) to keep running. People in Northern Ohio would pay the same $30 to keep their two old nuclear plants running.

Meanwhile, in Washington, an obscure government office, known as FERC, is trying to use unsound science to justify subsidies for all coal and nuclear plants in the country. If they succeed, all of us will be paying more for electricity, up to $50 more per year according to a Bank of America analysis.*

We are living in the twenty-first century. Why must wee support these relics of the twentieth?

  • In Jan. 2018  FERC denied the subsidy for coal and nuclear.

Ohio Wind Capacity

Wind Farms

 

Name County MW Ref.
 

Operational, 504 MW

Blue Creek Paulding,

Van Wert

304 (1)
Timber Rd. I Paulding 38 (1)
Timber Rd. II Paulding 99 (1)
Timber Rd. III Paulding 63 (1)
 

Under Construction, 466 MW

Hardin Hardin 300 (1)
Hog Creek Hardin 66 (1)
Northwest Ohio Paulding 100 (1)
 

Approved, 766 MW

Black Fork Crawford,

Richland

200 (1)
Buckeye I Champaign 135 (1)
Buckeye II Champaign 140 (1)
Greenwich Huron 60 (1)
Scioto Ridge Hardin 231 (1)
 

Planned, 670-680 MW

Exelon Seneca 200 (2)
Ice Breaker Cuyahoga 20-30 (3)
Long Prairie Van Wert 450 (4)

 

AEP and DPl have also announced plans for up to 800 MW of wind (5-7).  Small wind installations add 43 MW (8)

 

References:

(1) D. Gearino, ‘Different spins’, Columbus Dispatch, Sept. 24, 2017

(2) “Exelon to build its first commercial wind farm in Ohio”, Platts, 21 June 2016

(3) LEEDCo Vision and Timing http://www.leedco.org/icebreaker/vision-timeline, accessed 2 October 2017

(4) “Commissioners meet with wind farm representatives”, Times Bulletin, 3 Feb 2016

(5)”AEP renewable-power proposal ambitious, costly”, Columbus Dispatch, 16 Dec. 2015

http://www.dispatch.com/content/stories/business/2015/12/16/fresh-power-up.html

(6) “AEP wants to hear from wind developers interested in big Ohio projects”, Columbus Business Journal, May 13, 2016

(7) “DP&L agrees to invest in clean energy; signaling agreement to retire Stuart and Killen coal plants”, Sierra Club Press Release, 30 January 2017

(8) “Small wind turbines in Ohio are the next big thing, says Department of Energy” http://www.cleveland.com/business/index.ssf/2017/08/small_wind_turbines_in_ohio_ar_1.html, August 11, 2017

Setback Comparisons

Letter that the Dispatch did not publish:

In a letter to the Dispatch (10 Aug., 2017) Jeremy Kitson complained about possible legislation to reduce the distance separating wind farms from residences. Mr. Kitson also noted that the State has complete say in specifying wind-farm locations. Although it is not clear what distance (known as setback) will be in the proposed legislation, 1300 feet appears to be a likely guess, based on news reports.

Setbacks for oil and gas wells are much smaller. Ohio law (Section 1509.021) includes setbacks of 100 feet from rural homes and 50 feet from water supplies for oil and gas wells. As it is for wind, locations of oil and gas wells are determined by the State; local governments have no say.

Neighbors of oil and gas wells have bigger problems that neighbors of wind farms.