Energy policy needs to look at costs versus benefits and efficiency

Renewable energy is never fully costed

One of the first things they teach you in any management program is that any project you undertake must be thoroughly costed and benefits of that project must exceed its costs.

Cost vs benefit.

It’s such a simple concept and yet the proponents of the transition to renewable energy refuse to weigh the costs of providing intermittent electricity via wind turbines or solar panels against the benefits of the aforementioned energy sources.

If you read the literature produced by renewable energy advocates, you’ll see claims that solar and wind can produce electricity at about six cents per kWh.

Now, that is only marginally more expensive than a natural gas or coal plant which is producing electricity at about four cents per kWh.

What the advocates carefully avoid saying is that the wind or solar are producing electricity at that price when conditions are just right.

That is the problem of intermittency.

The wind has to be blowing at just the right speed. Too slow, the blades will not turn. Too fast, the blades must be stopped.

It’s the same thing for solar. Yes a panel will produce electricity when it is cloudy, but it wont’ produce very much.

That intermittency has a cost. With wind and solar production a mere fraction of its rated capacity (25 to 30 per cent), every single watt of electricity must be backed up some other power source.

Then there is the simple problem of location. Renewable energy installations, be they wind turbines or solar panels (utility grade), require ample space.

That means transmission lines must be built to carry that electricity to cities. That adds to the cost.

That is why electricity rates have increased so much ever since governments have begun mandating the switch to renewables.

One way or another, someone has to pay for the increased costs associated with renewables that arise because of intermittency issues or transmission. Either the taxpayer carries the extra cost or the ratepayer does. There is no getting around that fact.

Ah, but it’s all for a good cause, no?

That is always the fall back argument. The costs associated with renewable energy are worth it because the cost of increased CO2 production are high.

That is the social cost of emissions argument. It would make sense if the social cost of CO2 was actually incredibly high.

But it’s not. The best estimates I’ve seen put the cost at around $40-$50 per ton.

That’s it.

It’s been argued that even that low figure exaggerates the costs of higher CO2 emissions because it does not take into account the immense benefits of rising CO2 levels has on food production.

Still, even if we assume the $50 per ton cost, is there a better way to achieve lower emissions without raising the cost of electricity?

This is the efficiency argument.

What if we could reduce CO2 emissions by simply using existing power sources like coal and natural gas more efficiently?

In most of Asia, new coal plants are being built that employ supercritical combustion and circulating fluidized beds of coal.

The new plants are achieving thermal efficiencies of about 48 per cent. Older coal plants operate at about 32 per cent efficiency levels or even lower.

There are even newer technologies that promise even greater levels of efficiency.

The point being that the less coal that is burned to produce a watt of electricity means less CO2 is emitted.

Now, add in carbon capture and you have what managers like to call the virtuous circle.

In other words, what Canada needs is not so much a climate policy but an energy policy that looks at fostering efficiencies.

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