Lawrence Solomon: Are solar and wind finally cheaper than fossil fuels? Not a chance
“’Spectacular’ drop in renewable energy costs leads to record global boost,” The Guardian headline reported last year. “Clean Energy Is About to Become Cheaper Than Coal,” pronounced MIT’s Technology Review. “The cost of installing solar energy is going to plummet again,” echoed Grist, the environmental journal.
Other sources declare that renewables are not only getting cheaper, they have already become cheaper than conventional power. The climate-crusading DeSmogBlog reports that “Falling Costs of Renewable Power Make (B.C.’s) Site C Dam Obsolete” and that “Coal Just Became Uneconomic in Canada.” It implores us to discover “What Canada Can Learn From Germany’s Renewable Revolution,” as does Energy Post, an authoritative European journal, which described “The spectacular success of the German Energiewende (energy transition).”
Here’s what Canada can learn from Germany, the poster child for the global warming movement. After the German government decided to reduce subsidies to the solar industry in 2012, the industry nose-dived. By this year, virtually every major German solar producer had gone under as new capacity declined by 90 per cent and new investment by 92 per cent. Some 80,000 workers — 70 per cent of the solar workforce — lost their jobs. Solar power’s market share is shrinking and solar panels, having outlived their usefulness, are being retired without being replaced.
Wind power faces a similar fate. Germany has some 29,000 wind turbines, almost all of which have been benefitting from a 20-year subsidy program that began in 2000. Starting in 2020, when subsidies run out for some 5,700 wind turbines, thousands of them each year will lose government support, making the continued operation of most of them uneconomic based on current market prices. To make matters worse, with many of the turbines failing and becoming uneconomic to maintain, they represent an environmental liability and pose the possibility of abandonment. No funds have been set aside to dispose of the blades, which are unrecyclable, or to remove the turbines’ 3,000-tonne reinforced concrete bases, which reach depths of 20 metres, making them a hazard to the aquifers they pierce.
Those who hoped that Germany’s newest coalition government would provide the renewable industries with a reprieve were disappointed last week when Germany’s new economic minister indicated that there would be no turning back. All told, the cost to the German economy of its much-vaunted energy transition to renewables is estimated to reach 2 to 3 trillion euros by 2050.
Germany’s experience is being replicated throughout Europe — as subsidies fall, so does investment in wind turbines and solar plants, and so do jobs in these industries.
In the real world of business and commerce, the cost of renewables makes them unaffordable without intervention by the state. As Warren Buffet explained in 2014, “on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”
In the imagined world of politicians and environmental ideologues, renewables are not only affordable, they are inevitable. The difference in cost cited by those in the real and imagined worlds is called wishful thinking. This wishfulness is propped up through academic exercises that provide a stamp of authority on the ideologues’ beliefs.
One method for proving that renewables have arrived is something called “levelized cost of electricity,” which the U.S. Energy Information Administration says is “often cited as a convenient summary measure of the overall competiveness of different generating technologies.” Environmentalists cite levelized costs as if you can take them to the bank, but they are really no more than predictions of what the costs of various technologies will be over subsequent decades. By assuming that costs of producing solar panels and wind turbines will drop and the costs of fossil fuels will rise over the 30-, 40- or 50-year lifetime of a new plant a utility must build, and describing those levelized costs as if they were current costs, studies state authoritatively that renewables have become cheaper than fossil fuels.
Today’s claims that renewables are cheap and getting cheaper are familiar. They harken back to the first Earth Day in 1970, whose message of “New Energy for a New Era” was all about accelerating the transition to renewable energy worldwide. Then, as now, the belief in the viability of a renewable energy future was twinned with the conviction that fossil fuels, being finite, would inevitably become scarce and price themselves out of the market. To the ideologues’ never-ending dismay, peak oil never comes. Instead comes shale gas, shale oil, and peak renewables.
Lawrence Solomon executive director of Toronto-based Energy Probe. LawrenceSolomon@nextcity.com