Global Trend

The Beginning of the End for Wind and Solar
 
To the consternation of many, wind and solar have never, and will never make a serious contribution toward meeting mankind’s energy needs.  Just consider the indisputable set of facts assembled by our esteemed colleague, Matt Ridley, author of The Rational Optimist:

Even put together, wind and photovoltaic solar are supplying less than 1 per cent of global energy demand.  From the International Energy Agency’s 2016 Key Renewables Trends report, we can see that wind provided 0.46 percent of global energy consumption in 2014, and solar and tidal energy combined provided 0.35 percent. Remember this is total energy, not just electricity, which is less than a fifth of all final energy, the rest being the solid, gaseous, and liquid fuels that do the heavy lifting for heat, transport and industry.

Such numbers are not hard to find, but they don’t figure prominently in reports on energy derived from lobbyists for unreliable solar and wind. Their trick is to hide behind the statement that “close to 14 per cent of the world’s energy is renewable,” with the implication that this is wind and solar.  In fact, three quarters of this “renewable energy” is biomass and most of that is ‘traditional biomass,’ including sticks, logs and dung burned by the poor in their homes to cook with. Those people need that energy, but they pay a big price in terms of health problems caused by smoke inhalation.

Even in rich countries playing with subsidized wind and solar, a huge slug of their renewable energy comes from wood and hydroelectric, which are the only reliable renewables. Meanwhile, world energy demand has been growing at about 2 per cent a year for nearly 40 years. Between 2013 and 2014, again using International Energy Agency data, it grew by just under 2,000 terawatt-hours.

If wind turbines were to supply all of that growth, but no more, how many would need to be built each year?  The answer is nearly 350,000, since a two-megawatt turbine can produce only about 5 gigawatt-hours per annum. That’s one-and-a-half times as many turbines as have been built in the world since governments started pouring consumer funds into this so-called industry, in the early 2000s.

At a density of, very roughly, 50 acres per megawatt, typical for wind farms, that many turbines would require a land area greater than the United Kingdom and Ireland, every year.  If we kept this up for 50 years, we would have covered every square mile of a land area the size of Russia with wind farms, just to fulfil the new demand for energy, not to displace the vast existing supply of energy from fossil fuels, which currently supply 80 per cent of global energy needs.

And we can’t take refuge in the idea that wind turbines could become more efficient. There is a limit, called the Betz limit, to how much energy you can extract from a moving fluid, and wind turbines are already close to that limit. Their effectiveness (the load factor, to use the engineering term) is determined by the wind that is available, and that varies second to second, day to day, and year to year.

As machines, wind turbines are pretty good already; the problem is the wind resource itself, and we cannot change that. It’s a fluctuating stream of low?density energy. Mankind stopped using it for mission-critical transport and mechanical power long ago, for sound reasons. It’s just not very good.
 
As for resource consumption and environmental impacts, the direct effects of wind turbines, including killing birds and bats and sinking concrete foundations deep into wild lands, is bad enough. But out of sight and out of mind is the dirty pollution generated in Inner Mongolia by the mining of rare-earth metals for the magnets in the turbines.  This generates toxic and radioactive waste on an epic scale, which is why the phrase ‘clean energy’ is such a sick joke and its promoters should be ashamed every time it passes their lips.

And, it gets worse. Wind turbines, apart from the fiberglass blades, are made mostly of steel, with concrete bases. They need about 200 times as much material per unit of capacity as a state-of-the-art combined-cycle gas turbine. Steel is made with coal, not just to provide the heat for smelting ore, but to supply the carbon in the alloy. Cement is also often made using coal. The machinery of ‘clean’ renewables is the output of the fossil fuel economy, and largely the coal economy.

A two-megawatt wind turbine weighs about 250 tons, including the tower, nacelle, rotor and blades. Globally, it takes about half a tone of coal to make a tonne of steel. Add another 25 tons of coal for making the cement; so, you’re talking 150 tons of coal per turbine. Now if we are to build 350,000 wind turbines a year (or a smaller number of bigger ones), just to keep up with increasing energy demand, that will require 50 million tons of coal a year. That’s about half the EU’s hard-coal mining output.

The point of running through these numbers is to demonstrate that it is utterly futile, on “a priori” grounds, even to think that wind power can make any significant contribution to world energy supply, let alone to emissions reductions, without ruining the planet.  As the late David MacKay pointed out years back, the arithmetic is against such unreliable renewables.

The truth is, if you want to power civilization with fewer greenhouse gas emissions, then you should focus on shifting power generation, heat and transport to natural gas, the economically recoverable reserves of which ? thanks to horizontal drilling and hydraulic fracturing ? are much more abundant than we dreamed they ever could be. It is also the lowest-emitting of the fossil fuels, so the “emissions intensity” of our wealth creation can actually fall, while our wealth continues to increase.

And let’s put some of that burgeoning wealth into nuclear fission and fusion, so that it can take over from gas in the second half of this century.  That is an engineerable, clean future.  Everything else is a political displacement activity, one that is actually counter-productive as a climate policy and, worst of all, shamefully robs the poor to make the rich even richer.

As usual, Ridley’s facts are indisputably true.  They can lead to only one conclusion, wind energy never made economic sense and it never will.

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But, what about solar?

Analyzing solar is trickier than dissecting wind energy.  One reason is its varied forms.  While windfarms inevitably involve large capital investments by corporations or governments, solar energy takes on many forms ranging from roof-top photovoltaics installed on individual homes to enormous concentrated-energy thermal facilities occupying thousands of acres.

But, regardless of the format, one thing is clear, solar still can’t compete with fossil fuels without heavy government subsidies.  And, until recently, governments across the OECD have been willing to continue the subsidies, arguing that “in just a few years solar will become competitive.”

That’s why every few years, analysts “come out of the woodwork” to predict energy produced by solar panels will become cheaper than coal on a global scale. This year, the research firm Bloomberg New Energy Finance (or BNEF) predicts “solar may be cheaper than using coal on averageglobally” by 2025.

But before we break-out the champagne, let’s remember that Bloomberg News published a similar article in 2008, citing a U.S. Department of Energy (or DOE) report claiming “[c]osts for the technology will fall below coal as soon as 2020.” Then, DOE predicted “solar thermal” costs “may fall as low as 3.5 cents a kilowatt-hour by 2020.”

In reality, that prediction was more than a little optimistic. The Energy Department’s latest projection for the cost of electricity generation in 2022 has “solar thermal” pegged at 24 cents per kilowatt-hour.  And the Ivanpah solar thermal plant in southern California generates electricity at a cost of $200 per megawatt hour, or 20 cents per kilowatt-hour. That’s nearly six times the cost of electricity from natural gas-fired power plants.

Furthermore, the Energy Department predicts that, before any subsidies, generating electricity from photovoltaic solar panels in the U.S. will cost around 8.5 cents per kilowatt hour by 2022. That’s two-and-one-half times the cost of electricity from state -of-the-art natural gas.

In an earnings report published in May, Tesla said its Solar City unit deployed 150 megawatts of solar generating capacity in the first quarter of 2017 compared to 245 MW in the first quarter of 2016. That’s a drop of nearly 40 percent!

The company, which announced it was curtailing door-to-door sales, said it had prioritized higher-margin projects that generate cash up front rather than trying to sell as many installations as possible.  But this dramatic drop in sales for a company that had consistently delivered double-digit growth, reflects a broad trend affecting the rooftop-solar industry.

Across the sector, installers report more difficulty finding customers. Subsidies have dwindled or been eliminated in some states, and environmentally conscious homeowners with disposable income (who are the easiest consumers to sell to) have already purchased rooftop systems.

Meanwhile, stiff competition in the industry has pushed some companies out of the market, or forced them to scale back.  For instance, Sungevity, one of the nation’s biggest rooftop solar companies, filed for bankruptcy earlier this year.

Rooftop solar, a novelty in many neighborhoods just a few years ago, has enjoyed dramatic growth in recent years, including a 66 percent rise in installations between 2014 and 2015, according research firm GTM Research.

That growth rate slipped to 19 percent in 2016, and the trend has worsened significantly in 2017.  Not only did SolarCity post its worst quarterly solar deployments in nearly two years, but “residential interconnection requests” at California’s three investor-owned utilities were down 35 percent in January and February, according to state data.  That’s important since California makes up about half of the U. S. residential solar market.

And this is not just a North American trend.  Europe and Japan are experiencing a rapid decline in their solar industries as subsidies are reduced.

In short, wind and solar are going from boom to bust, and they aren’t coming back.

Given this trend, we offer the following forecasts for your consideration.

First, despite their economic irrationality, U. S. renewable energy subsidies will remain in place for at least the next five years.

Whether we’re talking wind, solar or ethanol, perverse incentives continue to encouragebad decisions.  In the specific case of renewables, subsidies transfer money from those willing to pay a premium for “all things green” to those who are happy to take their money.  For instance, Iowa farmers are blessed with wind, sunshine and corn; a majority in California is happy to pay a premium for wind and solar electricity, as well as ethanol.  So, while the resources could be used far more efficiently, neither party has an incentive to “rock the boat.”  -- To see how this ends, consider Germany.  While Germany has succeeded in increasing the share of wind and solar in German electricity production to over 30 percent, the averageGerman household spent 50 percent more on electricity in 2016 than in 2007.  And because of this cost problem, German firms open new manufacturing facilities not in Germany, but in Slovakia and other countries with much cheaper electricity.  As a result, Germany is busily scaling-back incentives for renewables.

Second, the smart money will rapidly exit wind energy projects in the coming decade.

At one time, investors like Warren Buffett and T. Boone Pickens wanted to cynically join others in making money via government subsidies.  But, once US natural gas emerged as the world’s cleanest and cheapest fuel, the game was over. Only the most brain-washed environmentalists, waiting for “peak oil,” could now believe wind can compete with fossil fuels.  Wind investors who hold on now, are like the World War II German soldiers who dreamed of victory after Stalingrad. And,

Third, China’s photovoltaic success will turn out to be a pyrrhic victory.

While U. S. and EU policy-makers fretted over China’s growing dominance in solar panels, they failed to recognize that having 100% market share in a low-margin, dead-end industry is not something that a capitalist should want to do.  Obviously, China can keep tens of millions of people employed making subsidized solar hardware, even as they build thousands of coal-fired power plants.  However, that is a poor use of resources for anyone who actually needs to generate an ROI.  
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References
1. The May 13, 2017.“Wind turbines are neither clean nor green and they provide zero global en- ergy by Matt Ridley.

https://www.spectator.co.uk/2017/05/wind-turbines-are-neither-clean-nor-green-and-they-provide-zero-global-energy/

2. Bloomberg New Energy Finance. January 3, 2017. “Solar Could Beat Coal to Become the Cheapest Power on”.

https://about.bnef.com/blog/solar-could-beat-coal-to-be-the-cheapest-power-on-earth/

3. The Daily Caller News Foundation. March 17, 2016. Obama-Backed Solar Plant Could Be Shut Down For Not Producing Enough Energy by Michael Bastasch.

http://dailycaller.com/2016/03/17/obama-backed-so-lar-plant-could-be-shut-down-for-not-producing-enough-energy/

4. Scientific American. December 19, 2016 “Why China Is Dominating the Solar Industry” by John Fialka.

https://www.scientificamerican.com/article/why-china-is-dominating-the-solar-industry/

5. May 5, 2017. “Tesla’s SolarCity’s Installations Crash Nearly 40%” by Nichola Groom.

http://www.businessinsider.com/solarcitys-solar-installations-crash-nearly-40-2017-5

6. com. Jul 18, 2017. “Up to 100 Japanese solar PV firms could go bust this year, report finds” by Andy Colthorpe.

https://www.pv-tech.org/news/up-to-100-japanese-solar-pv-firms-could-go-bust-this-year-report-finds

7. April 28, 2017. “The Shale Revolution Crushes Wind And Solar” by Mark P. Mills.

https://tallbloke.wordpress.com/2017/04/29/the-shale-revolution-crushes-wind-and-solar/