Paris withdrawal won’t deter wind, solar

Clean energy economics becoming irresistible

PRESIDENT TRUMP’S WITHDRAWAL from the Paris climate agreement, and the reactions to that retreat, are more theater than substance.  Whether the United States is in or out does little to prevent the rise of clean energy at the expense of coal, nuclear, and other traditional sources of electric power. There are two reasons. One is political: all of the major states of the United States – California, Texas, New York, Massachusetts, Illinois, Minnesota – are committed to clean power. Support is strong, and the president’s decision to withdraw from the Paris Accord will have the opposite of its intended effect: It will only strengthen the convictions of the leaders of these states to pursue a clean-energy economy.

The second reason is even more fundamental: economic inevitability. Wind and solar energy prices are rapidly transitioning from expensive to irresistible. Twenty years ago, it was commonly believed that nuclear and hydroelectricity were the primary no-carbon power sources. Wind energy was still extremely expensive, and solar energy was a sideshow mainly used to provide lukewarm water for the showers of early adopters.

Now new nuclear power plants are unwelcome everywhere except the states where old-style monopoly utilities still rule (notably, Georgia and South Carolina). Efforts to build a new nuclear facility have bankrupted an iconic brand – Westinghouse – which in turn threatens to bankrupt a huge Japanese company, Toshiba. Hydroelectric facilities are also facing challenges. Large new hydro facilities in British Columbia (Site C) and Newfoundland (Muskrat Falls) are enormously over budget and behind schedule. Site C’s cost structure was a major issue in the recent British Columbia provincial election, and a review of its cost assumptions seems imminent.

If completed, power from these struggling nuclear and hydroelectric facilities is likely to cost more than $100 per megawatt hour, or 10 cents per kilowatt hour. This is expensive electricity compared to market prices of around half of that in most of the United States.

Meanwhile, on-shore wind energy can now be developed in some places for $30 per megawatt hour, offshore wind has been bid in recent European auctions at $70 per megawatt hour, and new solar prices have come down from more than $100 per megawatt hour to half that number.

The only factor that can prevent the rise of cheap wind, solar, and the storage to firm them up is infrastructure: utility-scale solar and wind have to be delivered to market via new transmission lines. But so do hydro and nuclear, and the political power behind renewable energy is now strong enough in the progressive states to overcome “infrastructure-phobia.”

Even “delivered” electricity from wind and solar is now readily available for less than the $100 or more per megawatt hour that delivered new nuclear and hydro will cost. Meanwhile, distributed energy resources, including battery technologies and demand-side management software from high-tech companies, is promising to make these intermittent resources more stable and reliable.

It’s interesting that in the world of branding, it’s companies like Tesla, not Westinghouse or BC Hydro, that have gained popularity in the last 10 years. Wind, solar, batteries, and clean tech are hot; nuclear, hydro, and fossil-generated electricity are not. Accordingly, in the states that matter most, almost all the new power generation that will be built will be renewable.

The foundational issue is this: Cost reductions of wind and solar are more in keeping with the declining costs of technology, while the cost increases of nuclear and hydro are more in keeping with the increasing costs of traditional manufacturing industries. Electricity production, in other words, is caught between these two competing paradigms and it’s likely – in a market economy – that the declining cost pressures of the tech sector will prevail. In other words, electricity – even clean electricity – will remain cheap. After years during which hydro firmed up and made wind more affordable, we may be starting an era when wind makes hydro more affordable.

While President Trump is taking drastic steps to protect coal, an intense battle for market share is taking place within the zero carbon power business. Coal isn’t even a player.

In the next round of competitive, long-term clean power procurements, it is virtually certain that wind and solar will be less expensive in the long run than nuclear or hydro. For example, it would be cheaper for Georgia to buy power from a portfolio of solar from within its borders and wind from as far away as Oklahoma, than to continue its development of the Vogtle nuclear power plant that helped bankrupt Westinghouse.

Meet the Author
The rise of wind and solar reflects the entry of the high-tech industry into the power sector. Disruption is already underway and will only accelerate in most states and provinces that seek to decarbonize their energy sectors. In the tech sector, Moore’s Law remains a dominant metaphor for expectations, yet in the traditional power sector, baking in a 2 or 3 percent per year price increase is common.

These are diametrically opposing forces battling for the future of energy generation. Care to wager on which will win?

Ed Krapels is the CEO of Anbaric Development Partners, a clean energy transmission company.

  • NortheasternEE

    Great!!! If wind and solar prices are irresistible, then we do not need Paris. What we have gotten so far from these mandates are failures. Onshore wind turbines are impacting neighborhoods with excessive sonic and infrasonic emissions disrupting the quality of life for nearby residents. Bird and bat kills are at unacceptable levels, and mountains are being destroyed. Offshore wind comes in at more than 4 times the going rates. Solar panel fields give us clear-cutting woodlands. The prospect of force feeding all this variable power into the grid is what is sending baseload coal and nuclear into early retirement to be replaced by flexible and dirty natural gas. As a result GHG has stopped falling and may be going up. Charlie Baker is trying to reverse this by bringing in Canadian hydro to replace nuclear. It may work, but it will cost a fortune, and when done Global Warming will not stop because regardless of what we do, it is really up to China, India, Russia, and others. Bankrupting the USA is not really going to help save the world. The states that join this coalition are putting themselves at an economic disadvantage with the other states.

  • thinkmorebelieveless

    It is easy to see why wind and solar will prevail, They are heavily subsidized, and do to gov’t discrimination they do not have to deal with the Federal Energy Regulatory Commission. A Small hydro developer in Vermont claims, from personal experience, it will cost hundreds of thousands of dollars in regulatory compliance costs to repower a less than 100 kW hydro, at an existing dam. These costs are strangling hydro, even the biggest sites. As for Micro hydro, the Feds did not even include Micro hydro in the 30% income tax credit, but all the other renewables are included. Rigged system !