Solar: Cheap in the Pejorative Sense

Monday, December 19, 2016

Bloomberg Technology gushed last Thursday about "solar that's cheaper than wind," in a puff piece that energy advocate Alex Epstein largely debunked at least nine months ago. (And I'm not even talking about Epstein's identification of solar's "hazelnut problem." That was two years ago.) As for the remainder of the piece, a careful reader will notice that Bloomberg has kindly done the debunking for us.

The central claim at Bloomberg is:

A transformation is happening in global energy markets that's worth noting as 2016 comes to an end: Solar power, for the first time, is becoming the cheapest form of new electricity.

This has happened in isolated projects in the past: an especially competitive auction in the Middle East, for example, resulting in record-cheap solar costs. But now unsubsidized solar is beginning to outcompete coal and natural gas on a larger scale, and notably, new solar projects in emerging markets are costing less to build than wind projects, according to fresh data from Bloomberg New Energy Finance. [bold added, links omitted]
Really? On what basis are they making this claim? Expected expenditures on new capacity per megawatt for solar are now lower than those for wind, as per a graph; and they cite some production contracts with prices per megawatt-hour for electricity production that are "half the price of coal."

Fantastic, but what does that mean for someone who needs electricity? Here's what Epstein had to say, way back in March of this year:
But in energy, "capacity" is actually a technical term meaning the maximum momentary ability to produce electricity--not the consistent, long-term ability to produce electricity, which is what matters to human life.

For the kinds of energy I call "reliables"--coal, oil, gas, hydro, nuclear, capacity is roughly equal to ability because their fuel sources are stored, always available, and therefore controllable. A nuclear power plant, for example, might have the ability to run at 90% of "capacity" month after month.

But for the kinds of energy I call "unreliables"--solar and wind, whose fuel sources are intermittent, unpredictable, and most of the time unavailable, the term "capacity" is inherently misleading. A wind farm may operate near maximum capacity at brief, unpredictable moments and produce little to nothing the rest of the time. Those unreliable bursts might add up to 20-30% its supposed capacity. A set of solar panels may operate near capacity in the middle of the summer in the middle of the day when there are no clouds, but most of the time it has far less ability, when clouds (or non-summer seasons) come that ability can disappear, and at night the panels obviously have no electrical generation ability. For the purposes of providing individuals the cheap, plentiful, on-demand electricity they need, this is useless.
This is like touting the prices of a store you can't count on to keep its shelves stocked -- Walmart, I'm looking at you. -- as a reason to use it rather than a place with higher prices (but full shelves) when you need that baby formula now. In the middle of the day and if you have a backup plan, you might save money, but you'll pay more, and in other ways than just money when the "cheap" option falls through. This comparison is, however, flattering to solar which, unlike Walmart, is guaranteed to be fully useless at night and far more unpredictable during the day except, maybe in the desert. Solar is like a Walmart whose shelves may be mostly (or entirely empty) on any given day. You can call that "cheap" all you want, but you'll be correct only in the pejorative sense of the term.

On top of misreporting capacity for solar as if it is the same as that for coal, Bloomberg's mention of "unsubsidized" solar outcompeting reliable energy sources in "emerging markets" can be taken with a grain of salt, too. Bloomberg notes later in the article that, "'A huge part of this story is China, which has been rapidly deploying solar' and helping other countries finance their own projects." I can't help but wonder how many countries where solar power isn't "subsidized" (i.e., by their own governments) are getting help from China (artificially lowering their costs). And don't get me started on China's ongoing (See also the comments.) "rapid deployment" of entire cities that nobody inhabits. Might the same kind of flawed economic policy be behind both? That bet would be a better investment than solar energy.

So much for solar power winning in anything resembling a free market in anywhere but the sunniest, widest-open, energy-starved locales.

-- CAV

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