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.
What you have described very nicely is the distortion of the merit order as a result of layers and layers of subsidies to the renewables. And I agree that the carbon capture rule is the latest nonsensical weaponization of the EPA against coal and natural gas.
"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."
If "other energy resources" weren't given priority, the capacity factor for gas plants would be more like 90%, or 3.86 times greater than solar and 2.68 times greater than wind.
Intermittent solar and wind greatly lessen the efficiency of steady and reliable power sources and if this isn't stopped it will put some of the reliable sources out of business. The highest and best use of any industry is when it's used to the fullest, not just part of the time on-again off-again.
The mainstream media love to discuss the half truth of "capacity" so as to shield themselves from being accused of outright lying. The capacity/generation trade-off is fundamental to understanding energy. And another parameter which is infrequently discussed but equally important is EROI. These criteria are very helpful in screening which energy sources make sense at the national (grid) scale and which don't. I didn't see this particular point in your article but you may consider mentioning nuclear power plants (1970s vintage) that operate at around 90% capacity factor.
“Grid operators generally dispatch generators sequentially from lowest to highest cost. Because CCGT units built between 2010 and 2022 typically have the lowest operating costs, they are dispatched more frequently compared with older CCGT power plants. In 2022, the capacity factor of CCGT units that began operations between 2010 and 2022 averaged 64%, compared with 55% for those that began operations between 2000 and 2009 and 35% for units that began operations between 1990 and 1999.”
As I suspected, the reason for the modest capacity factors for combined cycle plants is very different than the reason for low capacity factors for wind and solar.
“The capacity factor for a combined-cycle natural gas power plant was 58.8% in 2023.”
Why did these plants not run the other 40.2% of the time? Were they down for unplanned outages and/or maintenance, or were they told not to run? I suspect it’s more the latter. I believe the reported capacity factors for combined cycle natural gas plants are artificially low.
Agreed. It's the latter. See my earlier comment on this also. The subsidies make the wholesale price of wind and solar dirt cheap during sunny or windy weather, so the utilities buy from them to the detriment of gas and nuclear, idling them and leaving them in the lurch.
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.
Fortunately, the idea of growing food at home is still safe, so far. Apparently the statement that we should cease growing food at home was not true. Whew! I'm working on a post about home organic gardening and seed-saving. Hopefully I'll have it ready by next week.
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.
What you have described very nicely is the distortion of the merit order as a result of layers and layers of subsidies to the renewables. And I agree that the carbon capture rule is the latest nonsensical weaponization of the EPA against coal and natural gas.
Very persuasive argument.
"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."
If "other energy resources" weren't given priority, the capacity factor for gas plants would be more like 90%, or 3.86 times greater than solar and 2.68 times greater than wind.
Intermittent solar and wind greatly lessen the efficiency of steady and reliable power sources and if this isn't stopped it will put some of the reliable sources out of business. The highest and best use of any industry is when it's used to the fullest, not just part of the time on-again off-again.
Great article and not a moment too soon...
The mainstream media love to discuss the half truth of "capacity" so as to shield themselves from being accused of outright lying. The capacity/generation trade-off is fundamental to understanding energy. And another parameter which is infrequently discussed but equally important is EROI. These criteria are very helpful in screening which energy sources make sense at the national (grid) scale and which don't. I didn't see this particular point in your article but you may consider mentioning nuclear power plants (1970s vintage) that operate at around 90% capacity factor.
According to the EIA
https://www.eia.gov/todayinenergy/detail.php?id=60984
“Grid operators generally dispatch generators sequentially from lowest to highest cost. Because CCGT units built between 2010 and 2022 typically have the lowest operating costs, they are dispatched more frequently compared with older CCGT power plants. In 2022, the capacity factor of CCGT units that began operations between 2010 and 2022 averaged 64%, compared with 55% for those that began operations between 2000 and 2009 and 35% for units that began operations between 1990 and 1999.”
As I suspected, the reason for the modest capacity factors for combined cycle plants is very different than the reason for low capacity factors for wind and solar.
Yes. See my comment on this also.
The piece says:
“The capacity factor for a combined-cycle natural gas power plant was 58.8% in 2023.”
Why did these plants not run the other 40.2% of the time? Were they down for unplanned outages and/or maintenance, or were they told not to run? I suspect it’s more the latter. I believe the reported capacity factors for combined cycle natural gas plants are artificially low.
Agreed. It's the latter. See my earlier comment on this also. The subsidies make the wholesale price of wind and solar dirt cheap during sunny or windy weather, so the utilities buy from them to the detriment of gas and nuclear, idling them and leaving them in the lurch.
I agree!
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.
Fortunately, the idea of growing food at home is still safe, so far. Apparently the statement that we should cease growing food at home was not true. Whew! I'm working on a post about home organic gardening and seed-saving. Hopefully I'll have it ready by next week.
https://www.aap.com.au/factcheck/home-grown-food-ban-claim-has-lost-the-garden-plot/