Renewable Energy Does Not Harm Stock Performance

There are still office holders who cling to the notion of expensive renewable energy, buttressed by questionable web sites.

There is a line of argument that I have not seen used: companies, such as Google and Amazon, have made major commitments to renewable energy. These are publically-traded firms. If renewable energy was so expensive, Wall Street would be shouting loudly and hammering their stock down. This has not happened.

Price of Conventional Fuels

Revised 31 March 2017

As is well known, natural gas has become cheaper than other conventional fuels. The price estimates below show that gas is less expensive than the competition. However all of the cost estimates are high compared with the actual price, which is given in the bottom row.

Cost/Price of Electricity from Conventional Sources, $/MWh

Coal Natural Gas Nuclear Ref.
60-143 47-78 97-136 (1)
N.A. 45-57 100-108 (2)
80-98 66-73 93-96 (3)
N.A. 50-70 N.A. (4)
N.A. 41-56 (a) N.A. (5)
34 (b) N.A. (6)

Notes:

(a) Increases linearly with gas price. Range shown is for $2.5 to $5 per 1000 cu.ft. Gas price on 16 Dec. 2016 was $3.43, giving a price of  $48 per MWh

(b) Unknown mix of gas and coal; April 2017 future

References:

(1) Lazard’s Levelized Cost of Energy Analysis – Version 10.0, December 2016

(2) EIA, Annual Energy Outlook, August 2016

(3) T.F. Stacy & G. S. Taylor, The Levilized Cost of Electricity from Existing Generation Resources, June 2015 http://instituteforenergyresearch.org/wp-content/uploads/2015/06/ier_lcoe_2015.pdf

(4) ”Solar going big: large-scale installations now outpacing small ones”, Toledo Blade, 22 July 2016

(5) Al Rosenfield, “Natural Gas vs. Wind Background” <alanpeg.blogspot.com>, 30 Jan. 2013

(6) PJM AEP Dayton Hub 5MW Peak Calendar-Month Real-Time LMP Futures Quotes

http://www.cmegroup.com/trading/energy/electricity/pjm-ad-hub-5-mw-peak-real-time-lmp-swap-futures.html, accessed 30 March 2017