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.

 

Alternative Motor Vehicles

Transportation is the second largest source of greenhouse gasses (1).

 

Technology Cars Other

Vehicles, (a)

Total
Ethanol/Flex Fuel 3.67 16.12 19.79
Electric/Gasoline Hybrid 3.43 0.44 3.87
Other Technologies (b) 0.81 0.32 1.13
Total Alternatives 7.90 16.88 24.79
Total Vehicles 120.5 121.4 241.9
% Alternative 7% 14% 10%

Notes in Table

(a) Vans, SUV, etc.

(b) Natural gas, all-electric, etc.

 

 

References:

 

(1) EPA “Sources of Greenhouse Gas Emissions” http://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions, accessed 27 June 2017

CONSEQUENCES OF RENEWABLE ENERGY

Several years ago Pfund & Chhabra showed that electricity rates are similar in states with large and small amounts of renewable energy. (“Renewables are Driving up Electricity Prices, WAIT, WHAT” DBL Investors, March 2015). I confirmed this finding via an update (A.R. Rosenfield,  “Testimony on HB114, posted on LWV Ohio web site).

The same holds for unemployment for states with less than ten percent hydropower.(see graph with data from Energy Information Administration: Electricity Data Browser; Bureau of Labor Statistics: Table 1. Employment status of the civilian noninstitutional population)  I eliminated hydropower because significant hydropower is unlikely in Ohio and it is believed to lower rates and bias the evaluation of renewable energy.

In the graph each each dot represents one state. Fourteen states have levels of renewable energy equal to, or greater than, Ohio’s eventual goal of 12.5 percent. As can be seen  from the graph, the states with large amounts of renewable energy show similar unemployment levels as those, such as Ohio, with little renewable energy.

 

SKYROCKETING ELECTRIC PRICES

Once more the Ohio Legislature plans to deal with electricity supply.

Once more they will complain about the high cost of clean energy.

Once more they will be wrong.

For the last several years the Legislature has focused on discouraging clean energy to the exclusion of the bigger problem of soaring residential rate increases. We have seen an almost annual chopping away at the clean-energy requirements in existing law. At one point the legislature even declared blast furnace exhaust gas to be renewable energy. This concentration on renewable energy ignores the average Ohioan, who is more concerned about the size of his electric bill than the number of wind farms in the state.

We need to know why electric bills almost continually go up. Electricity doesn’t change; when we pay our bills, we are not buying new and improved electricity. Actually the electricity that comes to our outlets is the same product that our parents bought, and our grandparents, and our great grandparents. If the product doesn’t change, shouldn’t the price remain about the same?

When Ohio’s clean energy bill was passed nine years ago the average electricity rate was around ten cents per kilowatt-hour (kWh). It is now around 12.5 cents, a 25 percent increase. It was rising at twice the rate of inflation before a small decrease last year. Household electric costs are now $300 more than they were when that clean energy bill was passed. It so happens that state income taxes have been reduced by about $300 for the typical family. Their tax relief has gone to the electric company to pay their higher bills.

The obvious logic is that clean energy caused the rate increase. But clean energy costs are reported on our electric bills, where we can see that they are a very small part of the problem.

Renewable energy has become increasingly attractive because of sharp price decreases. According to the 2016 Wind Market Report, real prices for electricity from new wind farms are about 3.5 cents per kWh in our part of the country, while the PUCO Apples-to-Apples web site shows that the generation part of Ohioans electric bills averages over 5 cents per kWh for a combination of coal, gas, and nuclear power – a thirty percent savings from wind over old-fashioned technology.

This price advantage has been recognized by many large companies, such as Apple and Google, who have made major commitments to renewable energy. Amazon’s commitment to renewable energy is seen here in Ohio, where they will be purchasing a large part of the state’s wind output. If wind was as expensive as the opponents claim, Wall Street would be reacting strongly and driving down the price of the stocks of these companies This has not happened.

Clean energy opponents still maintain that wind energy is expensive. To do so, they rely on a theory called levelized cost of energy (LCOE). Opponents’ cost estimates for wind are much higher that the price currently being charged by wind farms. If these theorists are correct, wind farms are losing 50 to 80 cents on the dollar. No explanation has been offered for this discrepancy between theory and reality.

Opponents also claim that the clean energy requirements are mandates on electric companies that inhibit the free market. This claim is only true for the generation part of providing electricity. In fact, consumers have a choice of generating company, and prices for this part of electric bills have moderated. There is no choice for the transmission and distribution parts of our bills, and this is where the large price increases have been concentrated.

Finally, opponents claim that subsidies give renewables an unfair advantage over fossil fuels. The subsidy is a federal issue, which the legislature has no control over. It is worth noting that most experts agree that wind would be competitive without the subsidy and that solar is getting there. The subsidies operate to lower our prices.

Electricity is a necessity. The legislature needs to stop blaming clean energy for excessive price rises and insure that average Ohioans are being treated reasonably.

 

Reality vs. Theory in RPS Costing

Despite a steep fall in wind-energy prices [1], there is still some dispute whether wind is competitive with conventional fossil fuels. There is a simple way to resolve this issue – compare the prices for electricity generated by wind with that by conventional fuels. A calculation made for the Great lakes region (IL, In, MI, Oh, & WI) found that wind was cheaper, with the difference about equal to the wind subsidy [2].

Analyses that claim wind is expensive use the levelized cost of energy (LCOE), which estimates theoretically the cost to produce electricity using various technologies. The most recent LCOE data show wind to be competitive with fossil fuels, even without the subsidy [3, 4] – the same conclusion reached by price analysis. However, there are two reports [5, 6] that claim that wind causes Ohio’s renewable energy portfolio to be expensive and harm the state’s economy. Serious errors exist in both reports:

  1. LCOE greatly overestimates the price of electricity produced by wind [7].
  2. LCOE values differ from report to report [3, 4]. Both Ohio reports [5, 6] used high LCOE values, without justifying their choice.
  3. References [5] and [6] both use out-of-date LCOE data. As noted above, the 2015 costs show wind to be competitive without subsidy, making the portfolio cost-free using their assumptions.
  4. Portfolio requirements are mostly fulfilled by renewable energy certificates, not by wind farm construction [8].

 

There was a time, several years ago, when wind was expensive. Politicians opposing renewable energy pretend that those days are still with us. They need to address a simple question: if it costs $75 per MWh to produce wind electricity [3], how can the producer sell it at $50 per MWh [3], lose 33 cents on the dollar, and still stay in business?

 

References

[1] Sally A. Talberg, et al., Report On The Implementation Of The P.A. 295 Renewable Energy Standard And The Cost-Effectiveness Of The Energy Standards, Michigan Public Service Commission, February 12, 2016

[2] Alanpeg (Al Rosenfield) Cheap Wind, June 7, 2016

[3] Energy Information Administration, Annual Energy Outlook, 2015

[4] Lazard’s Levelized Cost of Energy Analysis – Version 9.0, November 2015

[5] American Tradition Institute, The Cost and Economic Impact of Ohio’s Alternative Energy Portfolio Standard, April 2011

[6] Randy T Simmons, et al. Renewable Portfolio Standards: Ohio, April 2015,

[7] Alanpeg (Al Rosenfield) Recent Data Question Traditional LCOE Estimates, January 4 2015

[8] Galen Barbose, U.S. Renewables Portfolio Standards 2016 Annual Status Report, Report LBL-1005057, April 2016

 

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