New Energy Economy: An Exercise in Magical Thinking—Part 5 The Hidden Costs of a “Green” Grid

Continuing the serialization of Mark Mills’ report titled New Energy Economy: An Exercise In Magic Thinking:


The Hidden Costs of a “Green” Grid      

Subsidies, tax preferences, and mandates can hide realworld costs, but when enough of them accumulate, the effect should be visible in overall system costs. And it is. In Europe, the data show that the higher the share of wind/solar, the higher the average cost of grid electricity (Figure 3).

 Germany and Britain, well down the “new energy” path, have seen average electricity rates rise 60%–110% over the past two decades.37 The same pattern—more wind/ solar and higher electricity bills—is visible in Australia and Canada.38

Since the share of wind power, on a per-capita basis, in the U.S. is still at only a small fraction of that in most of Europe, the cost impacts on American ratepayers are less dramatic and less visible. Nonetheless, average U.S. residential electric costs have risen some 20% over the past 15 years.39 That should not have been the case. Average electric rates should have gone down, not up.

 Here’s why: coal and natural gas together supplied about 70% of electricity over that 15-year period.40 The price of fuel accounts for about 60%–70% of the cost to produce electricity when using hydrocarbons.41 Thus, about half the average cost of America’s electricity depends on coal and gas prices. The price of both those fuels has gone down by over 50% over that 15-year period. Utility costs, specifically, to purchase gas and coal are down some 25% over the past decade alone. In other words, cost savings from the shale-gas revolution have significantly insulated consumers, so far, from even higher rate increases.

The increased use of wind/solar imposes a variety of hidden, physics-based costs that are rarely acknowledged in utility or government accounting. For example, when large quantities of power are rapidly, repeatedly, and unpredictably cycled up and down, the challenge and costs associated with “balancing” a grid (i.e., keeping it from failing) are greatly increased. OECD analysts estimate that at least some of those “invisible” costs imposed on the grid add 20%–50% to the cost of grid kilowatt-hours.42

 Furthermore, flipping the role of the grid’s existing power plants from primary to backup for wind/ solar leads to other real but unallocated costs that emerge from physical realities. Increased cycling of conventional power plants increases wear-and-tear and maintenance costs. It also reduces the utilization of those expensive assets, which means that capital costs are spread out over fewer kWh produced— thereby arithmetically increasing the cost of each of those kilowatt-hours.43

 Then, if the share of episodic power becomes significant, the potential rises for complete system blackouts. That has happened twice after the wind died down unexpectedly (with some customers out for days in some areas) in the state of South Australia, which derives over 40% of its electricity from wind.44

After a total system outage in South Australia in 2018, Tesla, with much media fanfare, installed the world’s single largest lithium battery “farm” on that grid.45 For context, to keep South Australia lit for one half-day of no wind would require 80 such “world’s biggest” Tesla battery farms, and that’s on a grid that serves just 2.5 million people.

Engineers have other ways to achieve reliability; using old-fashioned giant diesel-engine generators as backup (engines essentially the same as those that propel cruise ships or that are used to back up data centers). Without fanfare, because of rising use of wind, U.S. utilities have been installing grid-scale engines at a furious pace. The grid now has over $4 billion in utility-scale, enginedriven generators (enough for about 100 cruise ships), with lots more to come. Most burn natural gas, though a lot of them are oil-fired. Three times as many such big reciprocating engines have been added to America’s grid over the past two decades as over the half-century prior to that.46

All these costs are real and are not allocated to wind or solar generators. But electricity consumers pay them. A way to understand what’s going on: managing grids with hidden costs imposed on nonfavored players would be like levying fees on car drivers for the highway wear-and-tear caused by heavy trucks while simultaneously subsidizing the cost of fueling those trucks.

The issue with wind and solar power comes down to a simple point: their usefulness is impractical on a national scale as a major or primary fuel source for generating electricity. As with any technology, pushing the boundaries of practical utilization is possible but usually not sensible or cost-effective. Helicopters offer an instructive analogy.

The development of a practical helicopter in the 1950s (four decades after its invention) inspired widespread hyperbole about that technology revolutionizing personal transportation. Today, the manufacture and use of helicopters is a multibillion-dollar niche industry providing useful and often-vital services. But one would no more use helicopters for regular Atlantic travel— though doable with elaborate logistics—than employ a nuclear reactor to power a train or photovoltaic systems to power a country.


Only recently did I become aware that  recips are often used as the backup to renewable energy.   Click here to read a little about the recips .

Part 6 will be titled Batteries Cannot Save the Grid or the Planet.


2 responses to “New Energy Economy: An Exercise in Magical Thinking—Part 5 The Hidden Costs of a “Green” Grid

  1. Hi Chuck,

    Neither article mentioned the major problem of the gas fired turbines which do propel many large air planes that fly at great altitudes so one cannot be heard when directly overhead. The extreme noise they create cannot be efficiently muffled as is the exhaust of recip engine can, even if these engines are large.

    Have a good day, Jerry

    On Mon, Jun 3, 2019 at 8:00 AM Climate Change Sanity wrote:

    > cbdakota posted: “Continuing the serialization of Mark Mills’ report > titled New Energy Economy: An Exercise In Magic Thinking: > ===================================================== The Hidden Costs of a > “Green” Grid Subsidies, tax preferences, and mandates ” >

  2. Congrats on a fact based useful article. I would have liked to see another x axis on the cost chart showing percent of power from wind/solar. The line is linear. Germany, I have read is about 30 to 35 % wind/solar and cost = 150 $/mwh higher than US US; getting to 60% would add another 150 and to 90+ another 150. Does that mean Germany’s 100% could cost $60/mwhr? Would there be added costs for reliability? Another factor you have not stressed is: We consumers pay for our power but also for all the power used by companies that supply our food, clothing and transportation costs and everything else. The true cost to the consumer will be amazingly expensive. I feel it will take our world back to the dark ages.

    I would like to start a company, or join one that is working on nuclear power. I feel it is the only option for power as we enter a slow descent into an ice age.

    My book; POLAR BEARS IN THE HOT TUB, published 5 months ago explains why the short warming after 1980 was not CO2. And had to be natural nuclear reactors in the earth.

    Art Krugler


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