You Are Being Fooled If You Think Wind Energy Is Cheap

Written by Climate Discussion Nexus on September 26, 2024. Posted in Current News

The late great P.J. O’Rourke once wrote, in The Atlantic in April 2002, that: “Beyond a certain point complexity is fraud…. when someone creates a system in which you can’t tell whether or not you’re being fooled, you’re being fooled.”

Which brings us to wind energy and its complicated contractual arrangements with modern electricity grids.

It’s not just a simple matter of bidding on contracts and supplying power when needed.

No, it’s become a mare’s nest of renewables mandates, portfolio standards, feed-in-tariffs, first-to-the-grid rules, dispatch, curtailment, hype, blame and losses that somehow no one saw coming.

And yes, you’re being fooled.

Debates over alternative energy, including its alleged cost advantages, often take place at a very high, almost abstract level. The general macro rule is that aggressive climate policies cause rising energy costs and often deindustrialization as well, not to mention brown- and blackouts, and this generalization is borne out across a wide range of jurisdictions.

When someone does go down into the weeds, as Parker Gallant frequently does in the Canadian province of Ontario, it’s amazing what muck he finds there.

For instance, he recently wrote that:

“on Sunday, September 8th, a somewhat cool summer day, Ontario’s peak electricity demand only reached a low 15,567 MW at Hour 20 which could have been principally supplied by nuclear and hydro baseload power (with a sprinkling of natural gas generation) but those IWT (industrial wind turbines) were humming!

At that hour those IWT generated 1,661 MWh but it really wasn’t needed however, due to their ‘first-to-the-rights’, IESO were obliged to either take their power or curtail it.”

To “curtail” means to tell the turbine owners not to generate then pay them a guaranteed price way above the market rate anyway, in this case $120/MWh when the going rate was $26.60.

So IESO, the “Independent Electricity System Operator” (and “Independent” here means it’s a government agency that isn’t answerable to anyone including the politicians we elect) bought the power and sold it at a massive loss.

And that triumph of wasting money and power is just the tip of the cashberg here.

As, we predict with some confidence, you’d find where you live as well especially if the green zealots designed the power system or tried to. It need not have been done with that express purpose; as with much else in human affairs, particularly governmental, complexity can arise from incompetence, including in managing growing systems.

But if those who operate and work within a system tolerate a degree of complexity over many years so great that not even they can really understand what’s happening, and the public is utterly incapable of grasping it and imposing accountability, they are guilty of perpetuating it out of self-interest, zealotry or both.

Power systems are generally complicated for necessary reasons as well as others. But when it comes to alternative energy, the impulse to make it look as good as possible pushes insiders in the direction of distortions and distractions that, if anyone else were doing it for a cause they did not share, would surely cause them to shake their heads.

To take one trivial example, we frequently hear about how more and more of a system’s power needs are being met by wind and solar every day. But of course if a power system is required to purchase those kinds first, then the fact that it buys a lot of its energy from them doesn’t prove that they are “winning” or “cheaper” or anything else.

The massive conventional backup system sits there, perfectly capable of powering the grid, often at lower price, and is forbidden by law or regulation from doing so.

In the case of Ontario, the IESO is forced to buy extremely expensive alternative energy and then dump much cheaper conventional onto the market, which the green crowd calls a triumph. As Gallant went on, showing just how baroque that provincial system is and how broke it’s making residents (and using more exclamation marks than we would advise):

“if we fast forward to September 10th, 11th and 12th, IESO reported much higher demand of 17,734 MW on the 10th, 18,522 MW on the 11th and 19,583 MW on the 12^th… how did those IWT perform?

As it turns out, those 4,900 MW of IWT capacity were pretty well absent during the peak hours generating only 308 MWh on the 10th, 287 MWh on the 11th and 128 MWh on the 12th!

So, totaling their performance over the peak hours during those three days they operated at a miserly 4.8 percent of their capacity despite those ‘first-to-the-grid’ rights they enjoy! For the full 72 hours of those three days their total generation was 27,706 MWh which was only 7.8 percent of their rated capacity!”

Brutal. And it gets worse because luckily the province has natural gas backups and:

“Over the three days those natural gas plants ramped up and down as needed and provided the grid with 276,747 MWh or ten (10) times what those IWT generated.”

This kind of thing makes for depressing reading as well as a headache. In another post, he cites a new report by the MacDonald-Laurier Institute that calculated the real cost of IWT over a decade and put a major dent in claims that wind and solar are cheap.

Especially given, for instance, that from 2020-23 alone the province paid just one (also government) entity, Ontario Power Generation or OPG, to “spill” some 6.6 TWh (yes, that’s terawatt/hours) generated by hydro dams.

Now the power in question mostly came from hydro… but it only wasn’t needed in the grid because of the mandated preference for wind that was used instead, making the hydro power redundant, and that wind costs far more.

So even once you net out the sale proceeds, the real cost of that “spill” exceeds $1 billion but in ways that, as you’ve doubtless noticed, are extremely hard to understand.

Or not, in that on the macro scale they drive up the cost of government and everything else. The system haemorrhages millions a day and it adds up to a sum you just can’t make vanish. As the report’s executive summary observes:

“Hoping to jump-start wind generation, Premier Dalton McGuinty’s government established high wind prices, fixed for 20 years, which averaged $151/MWh over the 2020–23 period.

As the sector grew, so did the fiscal liability of those contracts. Multi-billion-dollar government subsidies started in 2017 and will total $7.3 billion for the current fiscal year (Ontario 2024a), equivalent to 0.65 percent of provincial GDP (Ontario 2024b).”

Not of the provincial budget. Of the entire provincial economy. It’s fully three percent of the provincial budget which, at $214.5 billion, has reached a record high. Accounting jiggery-pokery just can’t make that kind of excessive costs vanish even if it can make them hard to understand and fix.

The MLI report ends up saying the real value of IWT generation is $46/MWh, less than 30 percent of what they’re paid to make it. And we’re meant to believe it’s a bargain?

Yup. An article in The Hub by the “Director for Ontario at Clean Prosperity” burbles that “The economic case for new clean electricity is now undeniable.”

And claims that:

“anyone still suggesting that [Ontario’s nominally conservative but actually rudderless] Premier Doug Ford has flip-flopped on renewable energy may not be keeping up with the pace of technological change.”

Because see batteries or something. Even that piece concedes that:

“Ontario’s prior missteps with clean electricity are well known. The previous government’s Green Energy Act offered renewable energy project developers guaranteed premium prices for their power that far exceeded fair market value.

It threatened to undermine energy affordability in the province. The Ford government quickly repealed the Green Energy Act when it was elected in 2018 and until recently was reluctant to risk driving up energy prices by making new investments in renewables.

Six years later, we’re in a new economic and technological reality. The cost of batteries has plummeted by 80 percent in the last decade. Since the repeal of the Green Energy Act, the cost of wind power has fallen 40 percent and the cost of solar roughly 30 percent.”

In just six years? Really? And nobody else noticed, since governments everywhere are still massively subsidizing the stuff?

The article propagandizes that:

“Ontario’s Independent Electricity System Operator (IESO) now expects to pay less than half as much for new renewable energy generation than in the mid-2000s.

More cost declines are forecast. The investment case for zero-carbon energy will only get stronger.”

But when’s the last time IESO’s proclaimed expectations were fulfilled, or were even comprehensible given the hideous complexity of Ontario’s power system? Who can even really tell?

At that point citizens are being had, by design or by fortuitous happenstance from a certain point of view.

As Alexander Hamilton and James Madison wrote in Federalist #62 in 1788:

“It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow.”

If you cannot tell whether your power system really is delivering more cheaply because of wind, solar, geothermal or sunbeams from cucumbers, it is of little avail that you are being asked to applaud it and can, in principle, vote for a number of different people who will perpetrate it and its complexity regardless.

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Header image: The Globe & Mail

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