by Angelos Kokkinos, Department of Energy Official under Presidents Obama, Trump and Biden

(cover photo courtesy UMass Lowell)

We have been hearing for years from environmental groups how if we switch to renewable energy our electric bill will be reduced while having reliable and resilient electricity supply.  This site published an article by the 350.org organization entitled “The Big Picture of Renewable Energy” touting this.

As the theory goes, in switching, we not only save mother earth and ourselves from extinction, but we will also be saving money.

Reminds me of Homer’s Iliad with the Greeks winning the war by tricking the Trojans with the “Trojan Horse”.  Just like the Greeks, the environmental lobby and their allies in government, are using the bait (”Trojan Horse”) of 100% renewable energy is cheaper to entice us (the Trojans) into converting our electricity supply to renewable energy.  They claim that because sunlight and wind are free, our electricity bills will lower automatically as we do not need to buy expensive fossil or nuclear fuel generated electricity.

History and experience tell us otherwise.

To make their numbers work, they use the significant number of tax and other incentives that renewable energy developers, suppliers, consumers and operators receive to mask the true cost of conversion to renewable energy.  They conveniently forget about the Production Tax Credit (PTC) that gives each wind/solar generator about $0.025/kWh cash tax refund, or the Renewable Portfolio Standards that a lot of states including ours have passed, requiring that a certain percentage of the electricity generated is from renewable sources, pushing the cost of buying renewable energy up – monopoly anyone? – along with the massive costs to modify our transmission and distribution system. 

The cost to modify our transmission and distribution grid can be significant as Dr. Brent Bennett articulated in his article “If Wind and Solar are so Cheap, why are Texans Paying More for Electricity.”

This switch has significant hidden costs that the environmental lobby does not include when touting that wind and solar produce electricity at lower rates than fossil fuels. Items such as the cost of transmission and distribution upgrades, payment to fossil plants to stay on line as backup when there is no wind or sun, subsidies such as “net metering” that overpays solar panel house owners for the excess electricity that they generate and send back to the grid.  All of these programs cost money paid for by us – the tax and rate payers – and our children/grandchildren in the form of national debt, with the profits and tax incentives of these projects ending up in the pockets of rich investors!

Have you ever heard a politician asking for a windfall tax on renewable energy developers or owners?  We do not see much discussion regarding reducing the enormous tax subsidies that high end investors or entities such as JP Morgan, Bank of America, BlackRock, etc. receive from federal and state governments.

Let’s look at some of the facts that the Renewable Energy lobby conveniently skip.

Articles claim that electricity costs will go down for two reasons: (1) the fuel is free and (2) cost of equipment (wind turbines and solar panels) has decreased dramatically.  Both of these claims are true, however there are other costs that are required so we can get this type electricity to our houses, shops, factories etc. All of these have to be paid by all of us and result in higher costs.

Before I go through and provide specific facts as to why converting to renewables will not reduce our electric bill, let’s look at what others have found out about renewable energy costs in the US and around the world.

California is well known for its progressive stand on renewable energy and climate change with 34.8% of the in-state power production coming from renewable sources – highest in the country – as compared to 3.4% in 2009.  At the same time electricity costs in California have doubled, from $0.145/kWh to $0.30/kWh in 2022 – inflation can only account for one third of this increase!

At the same time California passes a bill to delay the closure of natural gas plants and requires large consumers of electricity to have “dirty” diesel generators to deal with the intermittency/unpredictability of renewable power and ensure reliable power supplies especially during high wind days (high forest fire probability).

Texas is another state with a significant amount of wind power (a third of its daily peak load), having adapted an “open market” for retail electricity during periods of high demand (summer high heat days or winter freeze), when the wind is not blowing. Spot electricity prices to consumers have climbed to the state imposed ceiling of $9.00/kWh compared to the average $0.147/kWh, or 61 times the average!

The wind generators were a major cause of the February 2021 blackout.  The blackout cost the Texas economy $80 – $130 billion (estimated), insurance refunds were on the order of $10 – $20 billion, at least 111 deaths and another Value of Lost Load (VOLL) of $4.3 billion according to the Federal Reserve Bank of Dallas.

It is also estimating that winterizing the blades of the 13,000 installed wind turbines will cost $400,000 per turbine ($5.2 billion total) at the factory which is infeasible.  The Federal Bank of Dallas report indicates “wind power will remain an intermittent power source until adequate battery storage technology is developed. The Texas power grid is designed to seamlessly take on gas and coal generation when wind output declines. This is proving a larger challenge every year as more wind capacity is installed”.  This is a situation we could also face in New England as we increase renewable generation while retiring existing fossil and nuclear plants.

The increase in electricity cost is not a U.S. issue but it is also being felt globally. Germany has aggressively added wind and solar power to its grid with 46% of its consumption coming from renewable sources. In 2010 only 17% was generated from renewables.  The current residential electricity price in Germany is about $0.334/kWh and in 2010 was $0.262/kWh or a 27% increase.  Australia is another example where rates went from $0.05/kWh in 2015 to $0.192/kWh with spot prices up to $0.35/kWh in 2022 following the increase to 18.6% of renewables generation in their grid!

Our electric costs ($0.291/kWh) are 75% higher than the U.S. average of $0.166/kWh.  The electric utilities are very open as to what is makes up our monthly bill.  I was surprised to find out that only 54% is the cost of generating power, 13% is the cost for transmitting and distributing the power (controlled by the Federal government), and 33+% (depending on the season) going to various “taxes” that our “Solons” on Beacon Hill have imposed.

What are those taxes you may ask?  They contain everything from Attorney General Consultant Expenses, to Net Metering Recovery (more on this later), to pension adjustments, to three (3) different solar programs, to two (2) renewable contracts, etc.

You make ask what is Net Metering Recovery Charge.

When people go and install solar panels at a cost of $30 to $60 thousand on their roofs, the Commonwealth makes the utility buy back the excess power that the house solar panels generate and cannot use at the retail price.  The power that these panels generate is “low grade” power and the utility has to upgrade it so it can be useful to the main grid.  This process is inefficient, so the utility loses some of the power that it receives for the house solar panels, therefore it has to recover the cost of the lost power that they just bought. The state PUC allows them to recover it from everyone else that does not have the luxury of putting solar panels on their roofs (i.e., subsidies to the rich)!  Arizona has eliminated this “net metering charge” so it can be more equitable to rate payers.

Our utility bill tells us that only 54% of the charges that we receive are associated with power generation.  So, when they say that the sun and wind energy are free it only impacts the fuel cost portion of the 54% cost of generating electricity.  The cost of natural gas today accounts (approximately) for only $0.054/kWh of the $0.291/kWh, or 18% or our total costs.  Now a sensible person may think, “hey I’ll take an 18% reduction in my bill” – everyone wants an 18% discount on their bill.

Converting to 100% renewable energy, although it saves fuel, has other costs that the current fossil fuel fleet does not have.  For one it will require significant modifications to our current electricity Transmission and Distribution system.

For example, our legislation authorized the construction of 800 MW in off-shore wind power project.  According to the Dept. of Energy’s National Renewable Energy Laboratory (NREL), the levelized cost of electricity is more than double from off-shore wind as compared to land based ($0.078kWh vs $0.034/kWh).  Off-shore wind power will increase the levelized cost of electricity of the currently natural gas generated power by over 40% ($0.078 vs $0.54/kWh).

I should also point out that these are average costs in reality these would increase significantly as it would be a first of a kind project for us (Big Dig anyone?). I should point out that Dominion Energy is working on a project to install 2.6 GW (3.25 times larger than the proposed Massachusetts project) 27 miles offshore Virginia Beach will cost almost $10 billion.  It will install 176 wind turbines each generating 15 MW the largest ever built.  These turbines are over 780 feet tall (taller than the Seattle Space Needle) with each blade being close to 350 feet long!  By the way, these new, first of their kind kind turbines are known to cost around $250 million per year per GW to maintain – their operating equipment is located on top of a 600 feet tall column several miles away from the coast!

There are other costs that we need to account for.  All of the solar and wind power equipment have a finite life that is typically 20 to 30 years.  Once they reach the end of their life they have to be disposed of.  Old wind turbines cannot be recycled, so they are being buried.

Speaking of needing to bury wind turbines, there are many environmental and human costs of renewables that are rarely discussed. We will examine some of those in an article to be published next week on InsideLowell.

Angelos Kokkinos is retired from the U.S. Department of Energy where he was Director of Research and Associate Deputy Assistant Secretary for Advanced Fossil Technologies and Carbon Management in the Obama, Trump and Biden administrations.  Prior to joining the government, he was CTO of Babcock Power Inc., of Danvers MA, a major supplier of fossil and concentrated solar power generation and environmental control systems and was Chief Engineer of the Ivanpah Solar Power plant steam generators.  He is the holder of six U.S. Patents and the 2019 Pennsylvania State University Distinguished Achievement Award recipient in Fuel Science and Energy Engineering.  He calls Greater Lowell his adapted home since he migrated to the U.S. in 1970.  He has a B.S. in Chemical Engineering from UMass Lowell and a M.S. in Fuel Science from The Pennsylvania State University.