Failed economics of Renewable Energy: The Facts
Written by Ed Hoskins
By 2014 European Union countries had invested approximately €1.1 trillion, €1,100,000,000,000, in large scale Renewable Energy installations.
This has provided a nominal nameplate electrical generating capacity of about 216 Gigawatts, or nominally about ~22% of the total European generation needs of about 1000 Gigawatts.
The actual measured output by 2014 from data supplied by the Renewables Industry has been 38 Gigawatts or 3.8% of Europe’s electricity requirement, at a capacity factor of ~18% overall.
Accounting for capacity factors the capital cost of these Renewable Energy installations has been about €29billion / Gigawatt. That capital cost should be compared with conventional gas-fired electricity generation costing about €1billion / Gigawatt.
The whole 1000 Gigawatt fleet of European electricity generation installations could have been replaced with lower capital cost Gas-fired installations for the ~€1trillion of capital costs already expended on Renewable Energy in Europe.
The production of Renewable Energy is dependent on the seasons, local weather conditions and the rotation of the earth, day and night.
So the Renewable Energy contribution to the electricity supply grid is inevitably erratic, intermittent and non-dispatchable. It is therefore much less useful than dispatchable sources of electricity, that can be engaged whenever necessary to match demand and maintain grid stability. That 3.8% Renewable Energy contribution to the grid is often not available when needed, for example Solar energy is rarely available at the peak times on winter afternoons. But obversely the mandatory use of Renewable electricity can cause major grid disruption if the Renewable contribution is suddenly over abundant.
In spite of their being virtually no costs for fuel, Renewable Energy installations according to US EIA data can still cost up to 1.5 – 2.5 times as much to operate and maintain as conventional Gas Fired plant.
When the capacity percentages are taken into account, the capital costs can be 15 – 50 times greater than Gas Fired plant.
On average across Europe Renewable installations cost about 30 times more to build than conventional gas-fired installations.
Recent publications with data up to the end of 2014 have been used here. These organisations are either neutral towards Renewable Energy (US EIA) or actively promote it (EurObservER).
- US EIA 2015 Table 1
These publications give an up to date indication of the current scale of Renewable installations in Europe and data for the capital and running costs of different means of Energy generation, both Renewable and Fossil fuel based. These illustrated notes are derived from the combination of these two up to date data sources.
The US EIA data provides a useful yardstick for comparative capital costing and thus the level of investment committed and expenditures on Operation and Maintenance, fuel costs, which have recently reduced radically, where applicable, and connectivity costs. The comparative measure of US$ / Megawatt hour is used. The US$ and the Euro are close to parity and used interchangeably here for these comparative cost estimations.
Major European installations
This note concentrates on the seven European Nations with significant commitments to Renewable Energy. They account for more than 80% of European renewable investment.
In spite of it being a comparatively small player at ~5.4GW name plate installations, i.e. ~ 2.5% of the European total, Denmark is included in this analysis because of its preeminent position as a long term developer and supplier of Wind Power technology.
The following diagram shows the percentages of contribution for both solar and wind power in Europe. The preponderance of PV Solar power in Germany at 44% of the total european installation is very clear.
Comparable Electrical Generation effectiveness
The EurObservER data give the current base of Renewable Energy installations measured in Megawatts and annual output by country in Gigawatt hours and also the actual installed level by three types of generation:
- Onshore Wind Power
- Offshore Wind Power
- Grid connected Solar PV
The annual output noted by EurObservER in Gigawatt hours can be reduced to actual equivalent productive generation by dividing the output GWhr value by 8760, (365 * 24). This value is then used to assess capacity by comparing the actual generated output in Gigawatts with the nameplate value of the installed renewable generating sets by country.
Unfortunately the EurObservER data does not distinguish the output generated by Onshore and Offshore Wind Power but groups the outputs for both Wind Power types. In general one would expect Offshore Wind Power to be rather more productive, at in excess of 30% capacity, than Onshore installations at about 20%. But Offshore installations have much more onerous installation, operating and maintenance costs.
As the EurObservER data does not distinguish between the outputs of Onshore and Offshore Wind Power, their data results in an overall Wind Power capacity figure of about 21%.
The aggregate (Wind Power and PV Solar) productive capacities for the six European Nations are shown below and compared to conventional generating technologies.
Overall in Europe Renewable Energy is about 5 times less efficient (Energy Produced / Nameplate Capacity) than when fossil fuels are used, i.e. a capacity percentage of about 18% overall as opposed to some 85%.
The variations of efficiency between the seven European Nations seen above arises as a result of:
- their level of commitment to Solar energy as opposed to Wind Power: Overall in Europe Wind Power has a capacity percentage of ~22% as opposed to Solar energy of only ~12%
- their latitude, Solar power being significantly less effective in Northern Europe.
Accordingly German Renewable installations perform at only ~13% overall. They are by far the least performant in Europe because of their heavy commitment to Solar Energy at Northern latitudes. Germany is followed by Italy with a more Southerly position but still with a heavy commitment to Solar Power.
The scale of Renewable installations and approximate capital costs
The EurObservER data from 2014 is charted below showing the nameplate installations of the different forms of Renewable Energy.
According to the EurObservER data the actual Electricity output generated compared to the nameplate installed capacity is shown below.
It is estimated that 1 Gigawatt of gas-fired generating capacity costs about €1000,000,000 and the proportional capital costs derived from the EIA data combined is used to estimate the approximate capital costs of the European Renewable installations. Accordingly the distribution of estimated capital investment totalling more than €1 trillion, €1,000,000,000,000, is shown below.
These prices are estimated using the EurObservER reported nameplate capacity combined with the EIA differential values for capital costs. However their reports take no account of the detrimental capacity factors applicable to Renewable Energy installations.
National commitments to Renewable Energy installations in Europe
The scale of commitment too renewable energy in each of the major countries is shown in Megawatts / million head of population is shown below.
The outcome in terms the capital capital commitments to Renewable Energy per head of population is shown below.
The comparative commitments to Renewable Energy according to the data across Europe is shown as Megawatts installed / million head of population below.
Unsurprisingly Germany and Denmark are pre-eminent, whereas the UK and France have only achieved about a quarter of their levels of penetration.
In France which already has the lowest CO2 emissions levels/head of population of the developed world, already substantially less (~60%) than emissions / head in China, because of its long term commitment to Nuclear power for electricity generation, the installation of Renewable Energy (Wind Power and Solar) in France would seem to be particularly costly and pointless.
In more detail the following graphic shows the comparative Renewable Energy commitment across all the European Union countries in terms of Megawatts of nameplate generating capacity per million head of population is shown below.
Scoring cost effectiveness in Operation
The US EIA data makes comparisons in terms of $ / Megawatt hour.
These data have been combined with capacity data derived from the EurObservER reports:
- Wind Power overall (on-shore and off-shore) 21.8%
- Solar Power on grid 12.1%.
For comparative purposes these $/MW hr values are normalised comparing them to the EIA Gas-Fired generation cost and the readjusted to account for the capacity factors recorded. A fuel cost for Gas firing is assessed at about 50% more than than that for Coal in spite of the positive cost outcome of the “fracking revolution” in the USA and elsewhere.
Using the EIA base data and accounting for the EurObserER capacity factors this results in normalised comparative scores compared with gas-fired generation for both the Capital costs and Operation and Maintenance costs.
Capital cost are vastly more for all renewable installations as shown below
In spite of the fact that the gas-fired fuel costs account for ~70% of the total EIA estimated generation costs, Operation and Maintenance costs are still marginally more for Onshore Wind and more than double for both Offshore Wind and Solar Power. On the other hand the capital cost scores range from 14 times onshore wind to almost 50 times for Solar energy.
When the capital and running costs are combined on the EIA basis, Renewable Energy comparative cost scores are 4 times higher for onshore wind and up to 12 times greater for both Offshore wind and rather more for Solar Power. Coal and nuclear power generation, scored in a similar fashion are shown as a useful comparison.
To date about € trillion, (€1000,000,000,000), has been spent on the installation of Renewable Energy technologies for electricity generation in Europe.
By Government and EU diktat, this expenditure has been extracted in the most part by extra charges imposed on utility bills throughout Europe. Viewed as taxation on individuals this is very regressive: it imposes more burdens on poorer people whilst leaving wealthier people who are more able to pay less affected.
It also burdens European industries with vast energy costs, making them increasingly uncompetitive, as has now been seen from the uncompetitive nature of steel making in several European countries.
These Renewable Energy charges are also invisible in Government accounts as a tax income at all, as it is a price imposed on consumers by industry.
These regressive “Green taxes” have already lead to significant fuel poverty and throughout Europe.
Increased energy costs impact on European industries with many major corporations seeking more congenial manufacturing locations outside Europe to the detriment of European economies.
As a means of producing useful electrical power Renewable Energy is proven here to be very expensive, not only because its poor (~18%) capacity factor but also because it is much less useful to the electrical grid because of its non-dispatchability and inevitable intermittency.
It is also questionable whether these Renewable Energy industries, when viewed “from cradle to grave”, including manufacturing, site works, installation, connection and demolition costs, does in fact reduce CO2 emissions to any significant extent at all. The CO2 apparently saved may never exceed the CO2 emissions generated to manufacture and erect the total installation. At a maximum the use of Renewable Wind and Solar technologies only amounts to about a 4% saving in CO2 emissions in comparison to using Gas-fired power generation, when in operation,
The USA has made significant CO2 emissions reductions over recent decades by replacing Coal Fired generation with Gas Fired electricity generation with the feedstock provided by the fracking revolution. It is estimated that using natural gas for electricity generation as opposed coal burning saves about 30% of CO2 emissions. This outcome of this effect has been assessed to have been more effective means of CO2 emissions reduction than all actions worldwide arising from the Kyoto protocol.
The Renewable Energy industry could not exist without the Government mandated subsidies and preferential tariffs.
Without Government subsidies and consumption mandates the Renewable Energy industry is not a viable business.
Without its Government mandate, Government subsidies and Government interference Renewable Energy would never be a chosen part of the generating mix, when viewed from the needs for the engineering viability of a nation’s electrical supply grid.
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