If you, like me, were hoping that wind and solar could be low-cost energy alternatives to fossil fuels, you might want to sit down. I have some bad news.
A new study published this week by the Energy Policy Institute at the University of Chicago, concluded that the unreliable nature of wind and solar energy make them much more costly than other energy sources like fossil fuels and nuclear.
What’s more, the authors of the study found that not only are wind and solar more expensive, the price of using wind and solar to offset the carbon emissions caused by burning fossil fuels greatly outweighed the social cost of those emissions.
That last point is a sticky one, and I want to look at it further. Let’s first knock out the figures of the former. In order to do so, we need to step back a minute.
The Renewable Portfolio Standards (RPS), which was ratified by 29 states, requires increased production of energy coming from renewable sources. Looking at data from 1990 to 2015, the study authors compared energy costs from the states that implemented RPS with those that had not.
They concluded that the RPS “significantly increases average retail electricity prices, with prices increasing by 11% (1.3 cents per kilowatt-hour) seven years after the policy’s passage into law and 17% (2 cents per kWh) twelve years afterward.”
More than just cents per kilowatt-hour, the study sites other previously unconsidered factors that increase the cost of wind and solar: the unreliability of those energy sources, the land required to implement them, and displacement of cheaper energy sources.
For me, of those three factors, the most compelling is the inconsistent nature of wind and solar. With wind and solar, battery storage solutions need to be implemented to capture unused energy. And natural gas plants need to be ready to fill in when the sun isn’t shining and/or the wind isn’t blowing. Plus, as the study points out, places like Germany, California, and Denmark are currently paying neighboring states to take their excess wind and solar, which further increases cost.
This is all well and good. You could argue that, yes, solar and wind will be more expensive than coal or natural gas. And that’s OK because using renewable energy is better for the planet than otherwise. If you did argue that, at least according to this study, you’d be wrong.
The economists concluded that “the cost per metric ton of CO2 abated exceeds $130 in all specifications and ranges up to $460, making it at least several times larger than conventional estimates of the social cost of carbon.” For reference, the Obama Administration calculated the social cost of carbon at $50 per ton (in 2019 dollars). Currently, the price of carbon is just $5 in the US Northeast Regional Greenhouse Gas Initiative (RGGI), according to a Forbes report.
Now, here is where we need to do some serious arithmetic and ask a real question: Can we put a price on altering the planet?
I assume the Obama Administration calculations took into account social unrest, food shortages, and property lost to climate change, etc. in its social cost analysis. But can we really put a price on another mass extinction of species on our planet? Can we put a cost on losing our ocean reefs? I could go on.
Looking simply at energy generation and the impact it has on our planet through a monetary lens misses a great deal of the point. So, while this study (that has not yet been peer reviewed) might conclude that wind and solar are not worth the money, I am unswayed in my belief that it is.
Dollars be damned. We need to invest in these resources not because it’s good for our pocket book, but because it’s good for life on our planet.