Renewables Fail Badly in Brookings Cost Analysis

Washington, D.C. — Electricity generation from natural gas, nuclear, and hydro are far better economic and environmental propositions than wind or solar, according to a paper from the Washington-based Brookings Institution – The Net Benefits of Low and No-Carbon Electricity Technologies. The paper by Brookings fellow Charles R. Frank avoids the usual approach to analyzing energy costs.

Economist Frank “uses a methodology based on avoided emissions and avoided costs, rather than the more prevalent ‘levelized’ costs,” notes the report. He then examines the five technologies – gas (combined cycle), nuclear, hydro, wind, and solar – in that avoided cost analytic framework. The paper assumes the value of carbon emissions at $50/metric ton and the price of gas at $16/million Btu or less.

Under those assumptions, writes Frank, “nuclear, hydro and natural gas combined cycle have far more net benefits than either wind or solar. This the case because solar and wind facilities suffer from a very high capacity cost per megawatt, very low capacity factors and low reliability, which result in low avoided emissions and low avoided energy cost per dollar invested.”

Frank also finds that “low and no-carbon energy projects are most effective in avoiding emissions if a price for carbon is levied on fossil energy suppliers. In the absence of an appropriate price for carbon, new no-carbon plants will tend to displace low-carbon gas combined cycle plants rather than high-carbon coal plants and achieve only a fraction of the potential reduction in carbon emissions.”

The Environmental Protection Agency’s move to control CO2 emissions from existing coal plants, in the face of the political stalemate over pricing carbon, “can have some of the same effects as a carbon price in reducing coal plant emissions both in the short term and in the longer term, as old, inefficient coal plants are retired. However, a price levied on carbon dioxide emissions is likely to be a less costly way to achieve a reduction in carbon dioxide emissions.”

The Frank study says that “adjusting U.S. solar and wind capacity factors to take account of lack of reliability, we es­timate that it would take 7.30 MW of solar capacity, costing roughly four times as much per MW to pro­duce the same electrical output with the same degree of reliability as a baseload gas combined cycle plant. It requires an investment of approximately $29 mil­lion in utility-scale solar capacity to produce the same output with the same reliability as a $1 million invest­ment in gas combined cycle.”

Energy maven Glenn Schleede, who has long criticized the conventional levelized cost of energy approach, said of the Brookings report in an email: “The favorable aspects of the study are (a) it’s far more comprehensive in the factors that are considered in most of the studies that get attention, (b) it seems to be much more carefully done than most, and (c) it candidly admits the dozens of assumptions and the sources of actual and estimated data that underlie the analyses.”