Here is a question I have not heard either side in the debate about green renewable power address: Isn’t solar and wind power mostly about “peak load” power not base load power?
In California conventional power sources (gas, imported coal, nuclear) cost something like what: $0.10 to $0.20 per kilowatt hour for base load power? But typically during about 20 hot days in August and maybe another 10 to 20 days of cold snap in December-January, expensive peak load power needs to supplement the cheaper base load power at a cost of $0.40 to $0.50 and higher per kilowatt? So isn’t the more expensive solar and wind power at about $0.40 to $0.45 per kilowatt hour designed to meet peak power loads not base loads?
So “green power” advocates haven’t even stated their best case: that solar and wind power are more expensive but are designed to meet more costly peak loads?
Of course this begs the question already addressed above: what if the sun isn’t shining or wind blowing during those hot or cold days? You still have to have conventional back-up power. And such back up power has to be what is called “spinning reserves,” meaning the conventional power plant has to have turbines spinning in real time to kick-in in the event of a sudden drop in solar or wind power (cloud cover, wind speed drops). You can’t “black start” a conventional power plant.
And what about the possibility of green power creating what are called “stranded assets” in the peak load power industry? If I have financed and operate a gas fired peaker plant that amortizes itself based on, say, only 30 to 40 days of generation during peak hours/days but wind and solar are allowed to trump my power generation then I am out of business. Who is going to pay for my “stranded” asset? Ratepayers? Stock or bond investors? Or do I go bankrupt? Or does the California Public Utilities Commission decree that the sunk costs or bonds on the peaker plants made obsolescent by Green Power be added to the cost of solar and wind power, thus rendering its price even more uncompetitive?
What happens to many cities that now have gotten into the peaker plant business such as Pasadena and Burbank? Will implementation of AB 32 – the Global Warming Solutions Act – put such gas-fired peaker plants out of business?
I served on California Energy Crisis Task Force for large water district in Southern California during 2001. That crisis wasn’t about Enron gaming the system or a “perfect storm” of energy shortages as much as it was about how to pay for “stranded assets” from the Federal Environmental Protection Agency (EPA) mandating the mothballing of fossil fuel power plants along the coast to clean the air. The problem was that the corporate bonds (mortgages) on the plants were not paid off. The Cal Energy Crisis was a game of hot potato over who was going to pay the bonds off.
The first plan to pay off the old debts was deregulation which promised to lower electricity prices, say, 20% by competition but add-back in, say, 10% to pay off the old bonds, resulting in a net 10% savings to consumers. We don’t fully know if this would have worked because the new Democratic Party controlled state legislature and Governor in 2001 pulled the plug on deregulation to blockade out of state energy from Red States (Texas, Utah, Arizona) from capturing more of the Cal energy market (and thus indirectly enlarging the state budget deficit with lost jobs and taxes).
The second plan to pay off the debts was price controls. The Democratic Party legislature and Governor froze the price of retail power but not wholesale power. This is what Cal experienced as the Energy Crisis with rolling blackouts and monopoly energy companies (Edison, PG&E) becoming insolvent. What price controls were intended to do was induce a “pricing fever” that would pay off the debts. This failed as most price controls and bubbles fail.
What eventually happened is that the old debts were rolled into $40 billion of long-term energy contracts that are set to expire coincidentally in 2012, the year that Cal’s Assembly Bill 32 – Global Warming Solutions Act – kicks in. So green power is trying to capture by government fiat the energy demand from the expensive long-term contracted power (which was loaded with debt costs). So the argument could be made that expensive green power is just replacing expensive long-term contract power – but I haven’t heard anybody make such an argument.
I am not a green power advocate because I suspect that a shift to green power will result in yet another unintended California energy crisis with stranded assets and who knows what other “black swans?” (bond market collapse, high bond interest rates, investment wipeouts, or just higher prices to pay off more stranded assets, etc)?
Green power is not sustainable. If you transmit kilowatts of electrons to a home in Pasadena that uses the power to electrify home lighting that power is used up forever. It is not recyclable or reusable or sustainable. There is no such thing as a perpetual energy machine except possibly photosynthesis by plants which is dependent on the sun and can't generate enough energy to light a lightbulb and doesn't work at night.
But Green Power seems to be one big zero sum game that creates financial wipe outs that have to be added back into the cost of green power, making it more non-competitive even for use for peaker power.
Will Pasadena’s and Burbank’s peaker plants be rendered obsolete by Green Power? I do not know. Maybe the State Energy Commission that licenses power plants has a way to figure this out. Or maybe it is unknowable just like the effects of sub prime loans on banks and Wall Street. Then what? Maybe there is a power engineer, energy regulator, or expert out there who knows the answers to these questions. For the most part we're being kept in the dark about green power.