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In the Dark on Renewables: Rebutting Deloitte Insights and Climate Reality

Deloitte Insights and Climate Reality have recently issued reports making claims that renewables – especially wind and solar – are as cheap and as reliable as conventional coal-fired or natural-gas-fired power.

We demonstrate that these claims are not valid and show that wind and solar exist almost entirely due to preferential government programs and subsidies.

Mass deployment of wind and solar can destabilize power grids. Solutions like batteries, flywheels, and pumped hydro are exorbitant in cost. Renewables-plus-storage systems cannot reasonably be scaled up to meet society’s demand for reliable power.

Large additions of wind and solar do not necessarily reduce carbon dioxide emissions. In any case, human-produced CO2 is not a control knob that can fine-tune Earth’s climate

Deloitte Insights, an imprint of Deloitte LLC, recently published a report entitled Global Renewable Energy Trends—solar and wind move from mainstream to preferred.[1] Shortly thereafter, Climate Reality issued an e-book entitled How Renewables Work: A Practical Guide to Wind, Solar and Geothermal.[2]  According to Deloitte, wind and solar are now benefitting from three enablers:

The first enabler is that wind and solar are reaching price and performance parity on the grid and at the socket. Second, solar and wind can effectively help balance the grid. Third, new technologies are honing the competitive edge of wind and solar.

As this report shows, these claims are not valid.

LINK TO REPORT: In the Dark on Renewables FINAL Nov 18 2018

The assertion that wind and solar are reaching performance parity on the grid and at the socket ignores the reality that they require nearly equal amounts of conventional power generation to back them up because the wind does not always blow and the sun sets every day. Since wind and solar power generation systems are paired with fossil fuel, nuclear, and/or hydro back-up generation, wind and solar are effectively redundant, which means consumers effectively have to pay for two sets of generators. And while the costs of wind turbines and solar panels may have dropped in recent years, successfully integrating those technologies requires transmission-system upgrades, energy storage systems, and certain technical upgrades that all come at an additional cost.

Regarding the claim that wind and solar can effectively help balance the grid, it is true that certain technical advancements can reduce the negative effects that wind and solar have traditionally had on system stability. However, no amount of technical wizardry will allow wind to contribute to system balancing when the wind is not blowing, and no amount of wizardry will allow solar to contribute to grid balancing at 3:00 a.m. local time.

The price parity claim, which is based on a value known as the levelized cost of energy (LCOE), is also invalid. Even if the LCOEs of wind and solar were lower than the LCOEs of conventional generation—a debatable proposition—that does not translate into lower overall costs for consumers. The problem with the LCOE as a cost metric is that it ignores all the peripheral costs of forcing wind and solar onto the grid that were just noted.

According to Climate Reality, the transition to 100% renewable energy systems will be helped along by geothermal energy for heating and cooling.  This claim, too, is largely invalid. While geothermal is playing a role—and will continue to play a role—in the world’s energy systems, it is simply not capable of replacing traditional heating and cooling systems in all situations or all locations.

The absurdity of the notion that it will now be easy and cheap to convert to 100% renewable energy systems is highlighted by the following chart, which comes from BP’s Statistical Review of World Energy.[3]  Renewables (excluding hydro), shown in dark orange, accounted for just 3.6% of world primary energy consumption in 2017. Consequently, renewables advocates are effectively suggesting that we can rebuild the world’s entire energy system while maintaining the existing one as a backup, and that we can do in a ludicrously short period while keeping costs low.  This is simply not reality.

Please read the full report, linked above.

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[1]     https://www2.deloitte.com/insights/us/en/industry/power-and-utilities/global-renewable-energy-trends.html?id=us:2sm:3tw:4di4624:5awa:6di:MMDDYY:HANDLE::author&pkid=1005414

[2]     https://www.climaterealityproject.org/sites/default/files/renewables_ebook_09_2018.pdf

[3]     https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/downloads.html

3 Comments

  1. Levelized cost of energy. Its really big in helping CEOs deciding what energy path to take. These numbers are improving every year.

    https://nawindpower.com/lazard-study-confirms-wind-solar-costs-falling-below-those-of-conventional-generation?utm_medium=email&utm_source=LNH+11-16-2018&utm_campaign=NAW+Latest+News+Headlines

    Lazard Ltd., a financial advisory and asset management firm, has released its annual studies comparing the costs of energy from various generation technologies and of energy storage technologies for different applications. Importantly, Lazard’s Levelized Cost of Energy Analysis (LCOE 12.0) shows that, in some scenarios, alternative energy costs have decreased to the point that they are now at or below the marginal cost of conventional generation.

    • fosadmin

      November 27, 2018 at 1:57 pm

      Our report disputes their findings. This excerpt from one of our previous posts: “What makes renewables expensive is integrating these technologies into the grid. Grids can handle small amounts of renewables but the levels proposed by governments with environmental ambitions are overwhelming. These require massive expenditures in transmission, peaking power, and possibly storage. Even if wind and solar were free, the integration expenses could cost more than all other forms of generation once you pass a certain tipping point. Another cost is market reform but this would only apply in areas where there are competitive markets. In Alberta for example, the AESO has decided that renewable subsidies will make our once thriving energy market unsustainable. This has led them to introduce a capacity market which will lead to $10’s or maybe $100’s of millions in transition expenses along with years of uncertainty. Lastly, what gets lost in all this is the actual carbon reductions or lack thereof. The current state of storage technology is insufficient to back large quantities of renewables. This is leading to investments in relatively inefficient natural gas peaking facilities that negate the carbon benefits of renewables. Arguably, we may be better off from both a carbon and economic perspective by just investing in efficient base load natural gas and completely forgetting about renewables. Existing infrastructure could be used and market changes wouldn’t be required. Regardless of the chosen path, we are a long, long way from a 100% renewable energy grid.” http://blog.friendsofscience.org/2017/12/14/alberta-rejoicing-over-renewables-auction-will-be-short-lived/

  2. I am very big on perpetual tidal power generation in northern and southern hemispheres in coastal waters exceeding the 50th parallels

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