The Costs vs. Capacity Con: How the Figures Are Distorted and, Yet, Natural Gas Is Still the Better Bargain
Solar and wind advocates constantly preach that costs keep declining and soon they’ll be cheaper than natural gas. That assumption, though, is faulty in every respect, both from capital and operating costs perspectives. The latter is a matter of failure to account for subsidies and the indirect added costs imposed on baseload sources of power that cannot be avoided. The former were the subject of a Today in Energy post earlier this week. It shows construction costs per unit of power have gone up for solar and wind and down for natural gas, but that’s only half, and the less important half, of the story.
Here is the key paragraph from the article:
The average U.S. construction costs for solar photovoltaic systems and wind turbines in 2022 were close to 2021 costs, while natural gas-fired electricity generators decreased 11%, according to our recently released data. Average construction costs for solar generators increased by 1.7% in 2022, and for wind turbines they increased by 1.6%.
The accompanying chart shows the trend over the last decade:
Even though the story is about 2021-2022 trends, the charts are expanded backward to put a prettier picture on the long-term trend, which appears to show solar and wind are making phenomenal progress in reducing costs and getting closer to natural gas capital costs. The fact they’re 94% higher than gas in the case of solar and 77% higher than gas in the instance of wind is obscured, as is the fact the spread grew by 12-13% between 2021 and 2022.
None of this, moreover, takes into account the fact the costs are “capacity-weighted” or what that means. Generation is what matters, not capacity!
Costs per kilowatt in the real world have nothing whatsoever to do with nameplate capacity. That’s because solar panels, wind turbines or natural gas power plants cannot and do not operate 100% of the time despite their theoretical capacity to do so. Solar panels don’t work in the dark, wind turbines don’t turn when there’s no wind and natural gas plants have to shut down for maintenance or when other energy resources are given priority.
The capacity factor for a combined-cycle natural gas power plant was 58.8% in 2023 according to the EIA, the publisher of Today in Energy. This means energy was delivered 58.8% of the time and the plants operated at 58.8% of nameplate capacity. The capacity factor for solar panels was a pitiful 23.3% and wind was only at 33.5%. This means natural gas power plants operate at 2.5 times the efficiency of solar panels and 1.8 times that of wind.
If we take these factors of reality into account, then the real cost of natural gas per kilowatt is $1,395 versus $6,615 for solar and $4,331 for wind. Thus, solar construction costs are 4.7 times those for gas on a per kilowatt basis and wind construction costs are 3.1 times as expensive as gas. It’s not even close, folks, and, as of 2022, it’s getting worse for solar and wind and better for natural gas.
#Solar #Wind #CapacityFactors #EIA #ConstructionCosts #NaturalGas
It’s hard to imagine how the grifters is solar and wind can look at themselves in the mirror. But after the last decade of free government money and the leftists efforts, there are many poorly educated and unaware people buying into the pack of lies. When you add in the WEF and WHO backing population reduction and the recent declaration we shoujd cease growing food at home, you just have to conclude mental illness is prevalent. Where has the morality and work ethic gone? The belief that government provides everything is truly confounding.
I'd like to add a few more pieces to this puzzle. Even though initial capital costs are vastly lower for natural gas than for wind & solar, one also needs to consider the operating costs and fuel costs.
Regarding operating costs, solar and gas are comparable, falling between $17K to $25K per MW per year. Wind is higher at $50K per year.
Regarding fuel costs, wind and solar are free, while gas works out to something like $25-$40/MWh.
If this was all we had to consider, gas would still be the most economic option. But federal subsidies push hard on the balance to favor wind and solar. The federal Production Tax Credit (PTC) gives the producer a federal tax credit of $30 per MWh! That means every MWh the gas plant generates COSTS the Company about $30, while every MWh the wind or solar plant generates EARNS the Company about $30. This net difference of $60/MWh very quickly offsets the initial capital costs, especially when the capital costs are amortized for depreciation (as utilities must do).
Even with this huge subsidy for wind and solar, the economics over 20 years would still be close and depend on a variety of assumptions. What really pushes the economics towards wind and solar is the ADDITIONAL revenue a company can earn by selling the Renewable Energy Credits (RECs) from their wind and solar generators to other utilities that need to meet environmental targets. The value of these can range from $5 -$30 / MWh. It's an unbelievable waste of money, but people and companies are willing to spend real cash for the environmental attributes of energy that was sold to someone else.
And if that was not enough -- after all of these subsidies for wind and solar -- the utility companies must also consider EPA's newest rule that requires carbon-capture technology be installed on existing and future gas plants. This adds millions of $s in additional costs for the gas plants.
The only reason gas is even being considered anymore is because it's the only viable dispatchable resource, and a certain amount of 24/7 power is needed -- no matter what the cost -- for when the sun doesn't shine, and the wind doesn't blow.
The subsidies and penalties to make utility companies choose wind and solar over gas are obscene.