Renewable Energy Costs More Than You Think

Hand holding money banknote with photovoltaic solar energy panels in background,

By Bette Grande

In the summer of 2015, the Minnesota Public Utilities Commission (PUC) told Great River Energy it needed to reduce its dependency on coal. Of course, when the regulator who controls your business speaks, you listen. Since then, Great River Energy has followed PUC’s orders and closed one of its coal-fired plants in North Dakota. Making matters worse, Great River Energy recently informed its employees that it is considering solutions to “financial woes” at its Coal Creek Plant in North Dakota.

The 1,100-megawatt Coal Creek Plant is the largest coal-fired power plant in North Dakota. It supplies steady, abundant, and affordable electricity to 1.7 million consumers in Minnesota and Wisconsin. The plant sits next to a 700-year supply of lignite and it could continue to generate electricity to light the homes and businesses of consumers for years to come. However, as we have been told, “coal is bad.”

Unfortunately, throughout the country, utilities are bowing to pressure from politicians, regulators, and environmental activists by shutting down coal-fired power plants. A recent article in the Los Angeles Times chronicles the war against coal plants in the western United States, along with a heavy dose of green-speak. According to the article, data from the Sierra Club shows there are just 20 coal plants still operating in the western United States, without a predetermined retirement date.

Great River Energy has not committed to retiring Coal Creek Station—yet. However, for the 265 employees at Coal Creek Station, the decision to shut down the plant is not so much a question of if, but when. With Great River Energy required to file its next Integrated Resource Plan to Minnesota PUC in late 2021, we can expect an announcement of the plant’s future within the next 12 months.

Sadly, the health, safety, and finances of consumers do not carry much weight with politicians and regulators. We are told that it is consumers who are asking for renewables, that consumers are pushing the policies and regulations. This is far from the truth.

The initial campaign against coal was supposedly predicated on saving the planet from harmful CO2 emissions. This justification is still widely used to support the closing of coal plants in the United States. Nevertheless, China, Japan, India and several other nations continue to build new coal-fired plants faster than we can shut them down in America. Obviously, this “inconvenient truth/fact” does not coincide with the “saving the world” argument.

Thus, more recently, the war on coal is being repackaged and resold on the basis that electricity from new renewable energy projects is cheaper than electricity from coal.

The basis behind this new selling/talking point will be addressed below. But first, one might ask why are renewables now being sold as the less expensive alternative? The answer is important.

We are almost 50 years removed from the first Earth Day; generations have been taught that our only future is a green future. When asked whether they prefer electricity from dirty, nasty coal or gleaming windmills and pristine solar panels, the majority will say they prefer the latter.

However, when asked how much more they are willing to pay for electricity from renewables the answer is, not very much.

In a piece for Townhall, my colleague H. Sterling Burnett reviewed a recent public opinion survey in which 60 percent of the respondents believed we have just a few years to address climate change. Yet, the vast majority—71 percent to be exact—opposed paying an extra $10 per month for electricity to fight climate change. In other words, consumers are unwilling to put their money where their mouth is.

Yet, for some strange reason, we are relentlessly told that electricity from renewables is cheaper than electricity from existing coal-fired facilities. A Levelized Cost of Electricity (LCOE) analysis comparing the cost of electricity from new renewable projects with the cost of generating electricity from existing coal plants shows that electricity from renewables is cheaper. Or so they say.

A closer look shows that not all costs associated with a green grid have been factored in to the analysis cited above. Renewable sources of electricity are not reliable because they depend exclusively on the weather. Put another way, green electricity is not always available when it is needed. In terms of the electrical grid, it is not dispatchable.

This means that renewable sources of electricity will need to be built literally throughout the entire nation and they will require a traditional, dispatchable back up. When a dispatchable source such as coal, natural gas, or nuclear is used as a backup, it must be cycled up and down depending on the wind and sun. Obviously, this is not efficient and very expensive.

A recent report shows that when these additional costs are factored in to the LCOE analysis, the cost of electricity from existing coal-fired plants is less than half that of wind and solar. However, don’t worry, there is already talk of incorporating the “social cost of carbon” in the LCOE analysis to further thumb the scale in favor of renewables.

Unfortunately, it may be too late for coal; the green energy train has left the station. Just do not be surprised when the promised savings from “cheaper” electricity does not occur, and your energy bills continue to rise.

Bette Grande ([email protected]), a former North Dakota state representative, is a research fellow at The Heartland Institute.