Thanks Hannah, extremely useful, and articles where the conclusion is "there is no correlation" are especially valuable because they are rare.
You say you are cautious about cross-country comparisons, but Bjorn Lomborg had a piece in the WSJ where his chart showed a very clear and positive correlation between share of renewables and price of electricity across countries (what Joel was asking in another comment), and I am curious if you have a view on it: if his data are correct, is there a reason why we see such a clear correlation across countries but no correlation across US states?
A possible reason why Hannah is reluctant to do cross-country comparisons is that there is a lot of nuance that go into electricity prices, e.g. taxes, dependence on gas imports, etc. Some insight can be gleaned by going to Statista.com, https://www.statista.com/statistics/263492/electricity-prices-in-selected-countries/ . Italy now has the highest electricity price but has a relatively small fraction of renewables. Statista states that Italy and Germany are the top importers of natural gas and therefore are susceptible to market fluctuations.
Very good points. Italy's net energy imports are 80% of its total energy supply (https://www.iea.org/countries/italy/energy-mix ), so it's in a very weak position, plus with very shaky public finances taxes on energy must be very high as well. I wonder if there is more cross-"border" electricity buying and selling across US states than across countries in the world, and whether that has an impact at all.
Here in Sweden (where the grid is 100% renewable, mostly hydro, nuclear, and wind), electricity prices vary a lot not by state, but by electricity zone, with the depopulated (but high-renewable-supply) north 4x cheaper than the South, where most people live and where there isn't as much hydro or local supply generally. I live right in the center in a more expensive electricity zone and my electricity costs what the cheapest US states charge here. That's including the higher VAT tax we pay and increasingly high transmission charges to fund the build out of a more robust grid. In the North, electricity costs 1/10th or even 1/20th of what Americans pay. A reason for the regional disparity is that we do have a national (and region-wide) grid, but it doesn't have enough North-South transmission capacity to even out supply. That's something that the higher transmission charges are going towards funding in the years to come.
It's a good thing electricity is very cheap in Sweden, too, because we do use a lot of it, especially in the cold winters for heating. Unlike in the United States where natural gas and fuel oil can predominate for heating, almost all heating here is from efficient, electricity-powered heat-pumps. It's really strange to me that that technology, which has been operating at scale in the Nordics for 30-40 years, is really niche and considered insufficient in the US. Why wouldn't people in those states with cheaper 12-cent electricity take advantage? Even if you use a less high-performance Nordic-style system adapted to Arctic cold, you can install a lesser one very cheaply that would perform very well for more mild winters in the Southern half of the US. And, many of the cheaper air-source systems also operate as an AC, too!
Jarrod........take off your "ideological blinkers" please .....and RE-READ the article !
It is the "REPREHENSIBLE-RENEWABLES" that CAUSE the price to increase !
SUBTRACT their subsidies and ADD ON their TRANSMISSION CONNECTION COSTS
and you have an absolute nightmare ! Also , factor in their SHORT LIFE-SPAN , hence their necessity to BE RENEWED SO OFTEN , their expensive installation , maintenance , removal , and burying most of their un-reusable components and the re-installation
costs and you get an ACCURATE PRODUCTION COST FOR THE INTERMITTENT ELECTRICITY THEY PRODUCE about 40% to 50% of the time they actually operate ,
and you have about 3 times the PRICE of Coal /Oil/Gas fired power stations !
This is not to mention their hideous environmental defacement , the loss of farm land or animal and plant habitat PLUS all the additional mining required to produce the metals , concrete , insulation-materials , lubricants , glass , etc to make them in the first place !
Let alone renewing them every 5 , 10 , 15 or 20 years as they corrode , lose efficiency
or sustain damage from storms , fires etc.
Lomborg ASSUMED that the readers had SOME KNOWLEDGE of why they are cynically called "renewables" ! Evidently , some don't do they !
NUCLEAR POWER IS DEFINITELY THE WAY TO GO IN THE FUTURE !
Using "fission reactors" with Uranium first , then "breeder reactors" , then Thorium ,
Hi Hannah, very insightful as always. Just wanted to point out that Washington State has cheap electricity because of hydro (59% according to last week's article) but it may be the only state where this is true.
1. I noticed subsidies are not discussed here. How might factoring in the different levels of subsidization for each type of power affect conclusions drawn from the data? For instance, offshore wind is highly subsidized in particular, which may artificially lower residential cost per kWh but ultimately cost more overall, merely shifting those costs onto a broader base of taxpayers. Addressing direct vs indirect subsidies may make this analysis difficult, but I’d like to see what you could come up with.
2. The rate of change of energy technologies may also be a useful adjunct to this piece. For instance, nuclear has historically faced astronomical up-front costs to implement, but is quite inexpensive once running. Upcoming SMR technology will certainly reduce overall cost and speed of implementation for nuclear power. Solar also seems to have a rapid improvement curve. Perhaps it would get too speculative to write about now… but the next two decades of energy production are going to be markedly different than the past fifty years, and it would be interesting to extrapolate which technologies are most likely to outpace the others in the near- to mid-term (nuclear and solar come to mind), and over the long-term, which novel forms of energy production are so paradigm-shifting they render all backward-looking analysis moot (fusion, zero-point flux, pulsed-pyrolysis hydrogen, piezoelectric, and who-knows-what-else).
As always, the price (to the consumer) of a commodity is not exactly related to the cost (of production).
There are many market forces and political ambitions that determine what the consumer pays.
Here in the UK we have the absurd spectacle of Scottish wind farms being paid NOT to ship their power to the NATIONAL grid because the grid infrastructure cant cope.
Up to 10 years to get a new wind farm on the grid ...!
, it took me a month to get my input license for the PV array on our roof...Absurd.
Thanks for this! Matt Stoller recently did a piece on how electric utilities set prices based on investment costs (among many other factors) and the agencies and influences that produce those models. For renewables, I imagine this adds greatly to the complexity (and likely the per kwh cost). For example, maybe it could explain California being such an outlier.
A graphic I use in my piece on California solar sheds a lot of light on California residential rates. It's average residential rate sorted by utility, color-coded by type of utility -- investor owned, municipal, cooperative.
I don't seem able to paste the graphic into this comment, but my entire post is here, and the graphic is not far in. Look for purple:
Thanks Hannah ! An interesting foray into the "black hole of obfuscation and energy sources and energy prices and political interference" ! A total gordian-knot requiring FORCE to undo it !
The problem seems to be finding a base [ starting point ] from which to commence the foray !
As you were at pains to point out.........no two situations were sufficiently alike that a comparison could produce a reasonable conclusion.
There is so much POLITICAL INTERFERENCE with these "power prices" , subsidies , "off-sets" ,
and sources of electricity , that by the time you factor-in all the variables you have created something as complex , incomprehensible and inherently misleading as "Global Climate Model"
or a "Climate System Model" [ which still fails to successfully account for the most basic of meteorological phenomena .....clouds !!!!! But somehow , that "empirical evidence" can be ignored or minimised , and conclusions arrived at which they then call "climate science" , but which is evidently NOT SCIENCE at all ! It is purely IDEOLOGY ........and probably WRONG ! ].
Almost nowhere do they factor-in the initial costs of building the hydro-dams and the cost(s)
of the use of water for THAT PURPOSE as opposed to how else it may have been used , for example in irrigation of deserts etc. and food production etc..
Nevertheless , a useful glimpse into an area of fervent contention !
Thank you! Great sensemaking without overstepping the complexity of the issue. Some examples that are hard to compile into clear results:
--wholesale price is a real time auction where low bid power renewables push out higher price power... so the cost containment is not obvious
--"As noted in the World Energy Outlook, high fossil fuel prices were the main reason for upward pressure on global electricity prices, accounting for 90% of the rise in the average costs of electricity generation worldwide (natural gas alone for more than 50%)."
--retail price, to use the CA example, can reflect charges for fire prevention, social assistance, demand response control, conservation programs and more... as noted but worth reinforcing.. so comparing average wholesale cost by state correlated to wind/water/sun might be more illustrating.
--firming of the grid power mix to so that perfect load following and peak matching keep the grid stable are happening in many different forms in different states.. from methane gas peakers, overcapacity waste, battery, pumped hydro, and more
Thank you! Great sensemaking without overstepping the complexity of the issue. Some examples that are hard to compile into clear results:
--wholesale price is a real time auction where low bid power renewables push out higher price power... so the cost containment is not obvious
--"As noted in the World Energy Outlook, high fossil fuel prices were the main reason for upward pressure on global electricity prices, accounting for 90% of the rise in the average costs of electricity generation worldwide (natural gas alone for more than 50%)."
--retail price, to use the CA example, can reflect charges for fire prevention, social assistance, demand response control, conservation programs and more... as noted but worth reinforcing.. so comparing average wholesale cost by state correlated to wind/water/sun might be more illustrating.
--firming of the grid power mix to so that perfect load following and peak matching keep the grid stable are happening in many different forms in different states.. from methane gas peakers, overcapacity waste, battery, pumped hydro, and more
The simple fact of the matter is that those States HIGHLY SUBSIDIZE THEIR "clean energy programs"! So,no matter WHAT you pay,you pay EXTRA through your taxes! These technologies are NOT mature,and may never be! Add to that they're unreliability and difficulty connecting to the main grid!
Hannah, Can you add auxiliary plot points for the dates of the California wildfires that were attributed to the utilities for the California graph? Also, California has a much higher regional CPI compared to the US CPI, which better reflects the higher cost of living in California, affecting ratepayers and the utilites' California-based employees.
Thanks Hannah, extremely useful, and articles where the conclusion is "there is no correlation" are especially valuable because they are rare.
You say you are cautious about cross-country comparisons, but Bjorn Lomborg had a piece in the WSJ where his chart showed a very clear and positive correlation between share of renewables and price of electricity across countries (what Joel was asking in another comment), and I am curious if you have a view on it: if his data are correct, is there a reason why we see such a clear correlation across countries but no correlation across US states?
Thanks again for a great post
A possible reason why Hannah is reluctant to do cross-country comparisons is that there is a lot of nuance that go into electricity prices, e.g. taxes, dependence on gas imports, etc. Some insight can be gleaned by going to Statista.com, https://www.statista.com/statistics/263492/electricity-prices-in-selected-countries/ . Italy now has the highest electricity price but has a relatively small fraction of renewables. Statista states that Italy and Germany are the top importers of natural gas and therefore are susceptible to market fluctuations.
Very good points. Italy's net energy imports are 80% of its total energy supply (https://www.iea.org/countries/italy/energy-mix ), so it's in a very weak position, plus with very shaky public finances taxes on energy must be very high as well. I wonder if there is more cross-"border" electricity buying and selling across US states than across countries in the world, and whether that has an impact at all.
I’m sure glad she didn’t file this article away in the desk drawer never to see the light of day.
Here in Sweden (where the grid is 100% renewable, mostly hydro, nuclear, and wind), electricity prices vary a lot not by state, but by electricity zone, with the depopulated (but high-renewable-supply) north 4x cheaper than the South, where most people live and where there isn't as much hydro or local supply generally. I live right in the center in a more expensive electricity zone and my electricity costs what the cheapest US states charge here. That's including the higher VAT tax we pay and increasingly high transmission charges to fund the build out of a more robust grid. In the North, electricity costs 1/10th or even 1/20th of what Americans pay. A reason for the regional disparity is that we do have a national (and region-wide) grid, but it doesn't have enough North-South transmission capacity to even out supply. That's something that the higher transmission charges are going towards funding in the years to come.
It's a good thing electricity is very cheap in Sweden, too, because we do use a lot of it, especially in the cold winters for heating. Unlike in the United States where natural gas and fuel oil can predominate for heating, almost all heating here is from efficient, electricity-powered heat-pumps. It's really strange to me that that technology, which has been operating at scale in the Nordics for 30-40 years, is really niche and considered insufficient in the US. Why wouldn't people in those states with cheaper 12-cent electricity take advantage? Even if you use a less high-performance Nordic-style system adapted to Arctic cold, you can install a lesser one very cheaply that would perform very well for more mild winters in the Southern half of the US. And, many of the cheaper air-source systems also operate as an AC, too!
https://archive.ph/lZKbb
"The data make clear: The notion that solar and wind power save money is an environmentalist lie." Bjorn Lomborg.
Worth a quick read Hannah ! Regards , Trevor.
This Lomborg article is slop, it fatally ignores that countries with more expensive power are more financially motivated to add renewables.
Jarrod........take off your "ideological blinkers" please .....and RE-READ the article !
It is the "REPREHENSIBLE-RENEWABLES" that CAUSE the price to increase !
SUBTRACT their subsidies and ADD ON their TRANSMISSION CONNECTION COSTS
and you have an absolute nightmare ! Also , factor in their SHORT LIFE-SPAN , hence their necessity to BE RENEWED SO OFTEN , their expensive installation , maintenance , removal , and burying most of their un-reusable components and the re-installation
costs and you get an ACCURATE PRODUCTION COST FOR THE INTERMITTENT ELECTRICITY THEY PRODUCE about 40% to 50% of the time they actually operate ,
and you have about 3 times the PRICE of Coal /Oil/Gas fired power stations !
This is not to mention their hideous environmental defacement , the loss of farm land or animal and plant habitat PLUS all the additional mining required to produce the metals , concrete , insulation-materials , lubricants , glass , etc to make them in the first place !
Let alone renewing them every 5 , 10 , 15 or 20 years as they corrode , lose efficiency
or sustain damage from storms , fires etc.
Lomborg ASSUMED that the readers had SOME KNOWLEDGE of why they are cynically called "renewables" ! Evidently , some don't do they !
NUCLEAR POWER IS DEFINITELY THE WAY TO GO IN THE FUTURE !
Using "fission reactors" with Uranium first , then "breeder reactors" , then Thorium ,
and then , with any luck , fusion-reactors .
Lol.
Hi Hannah, very insightful as always. Just wanted to point out that Washington State has cheap electricity because of hydro (59% according to last week's article) but it may be the only state where this is true.
Always appreciate your insight, Hannah.
A couple questions came to mind:
1. I noticed subsidies are not discussed here. How might factoring in the different levels of subsidization for each type of power affect conclusions drawn from the data? For instance, offshore wind is highly subsidized in particular, which may artificially lower residential cost per kWh but ultimately cost more overall, merely shifting those costs onto a broader base of taxpayers. Addressing direct vs indirect subsidies may make this analysis difficult, but I’d like to see what you could come up with.
2. The rate of change of energy technologies may also be a useful adjunct to this piece. For instance, nuclear has historically faced astronomical up-front costs to implement, but is quite inexpensive once running. Upcoming SMR technology will certainly reduce overall cost and speed of implementation for nuclear power. Solar also seems to have a rapid improvement curve. Perhaps it would get too speculative to write about now… but the next two decades of energy production are going to be markedly different than the past fifty years, and it would be interesting to extrapolate which technologies are most likely to outpace the others in the near- to mid-term (nuclear and solar come to mind), and over the long-term, which novel forms of energy production are so paradigm-shifting they render all backward-looking analysis moot (fusion, zero-point flux, pulsed-pyrolysis hydrogen, piezoelectric, and who-knows-what-else).
As always, the price (to the consumer) of a commodity is not exactly related to the cost (of production).
There are many market forces and political ambitions that determine what the consumer pays.
Here in the UK we have the absurd spectacle of Scottish wind farms being paid NOT to ship their power to the NATIONAL grid because the grid infrastructure cant cope.
Up to 10 years to get a new wind farm on the grid ...!
, it took me a month to get my input license for the PV array on our roof...Absurd.
Thanks for this! Matt Stoller recently did a piece on how electric utilities set prices based on investment costs (among many other factors) and the agencies and influences that produce those models. For renewables, I imagine this adds greatly to the complexity (and likely the per kwh cost). For example, maybe it could explain California being such an outlier.
The piece in BIG: https://www.thebignewsletter.com/p/power-moves-how-electric-utility
The study it's based on: https://www.economicliberties.us/press-release/new-economic-liberties-paper-exposes-how-investor-owned-utilities-exploit-rate-of-return-policies-to-overcharge-americans/
Thanks, Hanna. Provocative as usual.
A graphic I use in my piece on California solar sheds a lot of light on California residential rates. It's average residential rate sorted by utility, color-coded by type of utility -- investor owned, municipal, cooperative.
I don't seem able to paste the graphic into this comment, but my entire post is here, and the graphic is not far in. Look for purple:
https://willbates.substack.com/p/the-strange-economics-of-solar
Keep up the good work.
Buzen.....................DITTO !!!
"Thanks for posting that article, Will. I really enjoyed reading it "
Thanks for posting that article, Will. I really enjoyed reading it and subscribed.
Thanks Hannah ! An interesting foray into the "black hole of obfuscation and energy sources and energy prices and political interference" ! A total gordian-knot requiring FORCE to undo it !
The problem seems to be finding a base [ starting point ] from which to commence the foray !
As you were at pains to point out.........no two situations were sufficiently alike that a comparison could produce a reasonable conclusion.
There is so much POLITICAL INTERFERENCE with these "power prices" , subsidies , "off-sets" ,
and sources of electricity , that by the time you factor-in all the variables you have created something as complex , incomprehensible and inherently misleading as "Global Climate Model"
or a "Climate System Model" [ which still fails to successfully account for the most basic of meteorological phenomena .....clouds !!!!! But somehow , that "empirical evidence" can be ignored or minimised , and conclusions arrived at which they then call "climate science" , but which is evidently NOT SCIENCE at all ! It is purely IDEOLOGY ........and probably WRONG ! ].
Almost nowhere do they factor-in the initial costs of building the hydro-dams and the cost(s)
of the use of water for THAT PURPOSE as opposed to how else it may have been used , for example in irrigation of deserts etc. and food production etc..
Nevertheless , a useful glimpse into an area of fervent contention !
Regards , Trevor.
Trevor, Trevor. Indoor voice, please.
Thank you! Great sensemaking without overstepping the complexity of the issue. Some examples that are hard to compile into clear results:
--wholesale price is a real time auction where low bid power renewables push out higher price power... so the cost containment is not obvious
--"As noted in the World Energy Outlook, high fossil fuel prices were the main reason for upward pressure on global electricity prices, accounting for 90% of the rise in the average costs of electricity generation worldwide (natural gas alone for more than 50%)."
https://www.iea.org/commentaries/the-global-energy-crisis-pushed-fossil-fuel-consumption-subsidies-to-an-all-time-high
--retail price, to use the CA example, can reflect charges for fire prevention, social assistance, demand response control, conservation programs and more... as noted but worth reinforcing.. so comparing average wholesale cost by state correlated to wind/water/sun might be more illustrating.
--firming of the grid power mix to so that perfect load following and peak matching keep the grid stable are happening in many different forms in different states.. from methane gas peakers, overcapacity waste, battery, pumped hydro, and more
--per Jacobson, there is correlation: the 11 states with the most wind/water/sun tend to be in the lowest $/kWh bracket and also (from other data) the highest reliability bracket (SAIDI, CAIDI) https://web.stanford.edu/group/efmh/jacobson/WWSBook/Countries100Pct.pdf
Thank you! Great sensemaking without overstepping the complexity of the issue. Some examples that are hard to compile into clear results:
--wholesale price is a real time auction where low bid power renewables push out higher price power... so the cost containment is not obvious
--"As noted in the World Energy Outlook, high fossil fuel prices were the main reason for upward pressure on global electricity prices, accounting for 90% of the rise in the average costs of electricity generation worldwide (natural gas alone for more than 50%)."
https://www.iea.org/commentaries/the-global-energy-crisis-pushed-fossil-fuel-consumption-subsidies-to-an-all-time-high
--retail price, to use the CA example, can reflect charges for fire prevention, social assistance, demand response control, conservation programs and more... as noted but worth reinforcing.. so comparing average wholesale cost by state correlated to wind/water/sun might be more illustrating.
--firming of the grid power mix to so that perfect load following and peak matching keep the grid stable are happening in many different forms in different states.. from methane gas peakers, overcapacity waste, battery, pumped hydro, and more
--per Jacobson, there is correlation: the 11 states with the most wind/water/sun tend to be in the lowest $/kWh bracket and also (from other data) the highest reliability bracket (SAIDI, CAIDI) https://web.stanford.edu/group/efmh/jacobson/WWSBook/Countries100Pct.pdf
This is great stuff, I'm so happy to see it.
The question begged here is, What, in fact, is the smoking gun, if there is one at all?
I.e. is there anything that shows why some states have higher prices than others?
hypothesis: States which user more electricity than they generate have higher prices.
The simple fact of the matter is that those States HIGHLY SUBSIDIZE THEIR "clean energy programs"! So,no matter WHAT you pay,you pay EXTRA through your taxes! These technologies are NOT mature,and may never be! Add to that they're unreliability and difficulty connecting to the main grid!
Really interesting analysis, thank you for sharing!
Hannah, Can you add auxiliary plot points for the dates of the California wildfires that were attributed to the utilities for the California graph? Also, California has a much higher regional CPI compared to the US CPI, which better reflects the higher cost of living in California, affecting ratepayers and the utilites' California-based employees.
I think you'd get quite different results by comparing countries.