Spain’s Massive Investment in Solar Power has Greatly increased the Cost of their Electric Power

Posted by PITHOCRATES - August 24th, 2013

Week in Review

People think renewable energy is the answer to all our energy problems.  But that isn’t quite so.  In fact, all it does is increase the cost of our electric power.  For sunshine and wind may be free.  But the equipment to harness the energy in sunshine and wind is not free.  It is very, very expensive.  And you need a lot of it.  You will not see one wind turbine service the power needs of one metropolitan area.  You may see a wind farm providing a small percentage of the electric power needs of a large metropolitan area.  And only when the wind blows.

Wind can blow day or night.  But it can also NOT blow day and night.  While solar panels will not work at all at night.  So you have massive investments to install renewable energy generation capacity.  And there will be times when they will provide no power.  So what do you do?  What do you do when the wind doesn’t blow and the sun doesn’t shine?  You turn to old reliable.  The electric grid.

This is why renewable energy is so costly.  It cannot replace our fossil-fuel power plants that can provide reliable power day or night in any type of weather.  It can only supplement what we call our baseload power.  Like our beloved coal-fired power plants.  One of the most cost-efficient ways to produce reliable electric power.  Which the power companies have to still run and maintain day and night.  For those who don’t have a wind turbine or a solar array providing their electric power.  And to light up the night.  So instead of one cost-efficient power generation system we have two systems.  One cost-efficient and one cost-inefficient.  And those who invested heavily into renewable energy are now having to deal with these very real problems (see Out Of Ideas And In Debt, Spain Sets Sights On Taxing The Sun by Kelly Phillips Erb posted 8/19/2013 on Forbes).

With so much sunshine at its disposal, Spain has aggressively pursued the development of solar energy: over the past ten years, the government has made significant advances in pressing solar energy and is one of the top countries in the world with respect to installed photovoltaic (PV) solar energy capacity.

It might, however, be too much of a good thing. Spain is generating so much solar power, according to its government, that production capacity exceeds demand by more than 60%. That imbalance has created a problem for the government which now finds itself in debt to producers. And not by a little bit. The debt is said to have grown to nearly 26 billion euros ($34.73 billion U.S.).

So how do you get out of that kind of debt? You propose incredibly onerous taxes and fines, of course. And you do it on exactly the behavior that you encouraged in the first place: the use of solar energy panels. That’s right. Spain is now attempting to scale back the use of solar panels – the use of which they have encouraged and subsidized over the last decade – by imposing a tax on those who use the panels…

…many residents in Spain generate enough electricity from solar that they get paid to selling the excess energy back to producers. This, it turns out, is a problem. The government is putting a stop to that, too: as part of the reform efforts (read: desperate measures), there will be a prohibition on selling extra energy.

If the power companies are providing all the power at night they have to maintain their power plants.  And their power distribution system.  Which means they even have to trim the trees away from their overhead power lines from people who use solar power during the day.  Nothing changes for the power companies.  Except that they can’t sell as much power as they once did.  So their costs of producing power remain the same.  But their revenue has fallen.  Forcing them to operate at a loss.  Or find other ways to replace their lost revenue.  Which they have to.  Because they must have the same capacity available during the day that they have at night.  Even if they aren’t selling as much power during the day as they are at night.  And the last thing they want to do is buy excess power back from homeowners with solar panels on their house when they’re producing their own power that they can’t sell.

Baseload power plants like coal and nuclear take time to bring on line.  They have to produce the heat that boils water into steam.  Then superheat the steam to remove all water from it.  So the steam can spin the generator turbines without damaging the vanes on the turbine.  And once they start these plants up they run these systems at full capacity where they produce power most cost-efficiently.  During peak demand they may bring on some gas-fired turbines that can start and produce power quickly.  And add them to the grid.  When the peak subsides they can shut down these gas-fired turbines and let the baseload generation carry the remaining load.

The Spanish government invested heavily into solar power for whatever reason.  It’s ‘free’ power.  It’s ‘clean’ power.  Or it was just a good way to create a lot of jobs.  But what Spain has now is a surplus of peak power generation during the day that doesn’t eliminate the need to maintain baseload power generation during the day.  Creating a surplus of electric power during the day no one wants.  While requiring power companies to maintain their baseload power during the day so they can provide power at night.  Incurring great costs on the power companies.  Which must be passed on to the same people who paid for the renewable energies subsidies.  The electric power consumer.

This is a classic example of a Hayekian malinvestment.  Friedrich Hayek of the Austrian school of economics said this is what happens when governments interfere with free markets.  They make investments to produce what they think is best while the market demands something else.  The market demanded low-cost electric power.  Which baseload power plants (coal and nuclear) provided.  But the government intervened and subsidized the more costly solar power.  This bad investment—or malinvestment—has only increased the cost of electric power for the Spanish consumer.  And now the Spanish have a big problem on their hands.  What to do with this surplus of peak power no one wants to pay for?  And how to replace the lost revenue of the power companies so they can cover their costs?  Two problems they didn’t have until the government intervened into the free market.

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Texas turns to Gas-Fired Power Plants to meet Peak Electric Demand their Wind Power cannot Meet

Posted by PITHOCRATES - June 30th, 2012

Week in Review

Texas has more wind-generated electricity than any other state in the country.  According to the American Wind Energy Association’s U.S. Wind Industry Fourth Quarter 2011 Market Report Texas has a total installed nameplate capacity of 10,377 Mega Watts (MW).  Meaning these wind turbines can produce 10, 377 MW under ideal wind conditions.  But as wind conditions are rarely ideal these Texas wind farms will struggle to produce half of that nameplate capacity.

Wind power has a capacity factor of about 20-40%.  Wind turbines will only produce electricity for a range of winds.  They have to spin fast enough to produce electric power at 60 cycles per second so they can connect this power to the electric grid.  But not so fast that they could damage the turbines.  For that range of winds variable pitch blades on the ‘propeller’ adjust their angle of attack to produce 60 cycles per second in that wind range.  The ‘propellers’ won’t spin that fast.  But a gear box will gear up that constant rotational motion to spin an electric generator (or alternator) at 60 cycles per second.  Thus creating electric power that we can connect to the grid.

So, of that 10,377 Mega Watts Texas nameplate capacity it will provide at most 4,151 MW (40% capacity factor) of power to add to the electric grid.  Which explains why the state with the greatest amount of wind-generated electric power is turning to coal and natural gas to meet peak electric loads (see Texas prepares for soaring power demand, urges conservation by Eileen O’Grady and Scott DiSavino posted 6/25/2012 on Reuters).

Power demand reached 65,047 megawatts in the hour between 4 p.m. and 5 p.m. CDT (2200 GMT), surpassing the June record of 63,102 MW set last year, according to preliminary grid data…

ERCOT [Electric Reliability Council of Texas] said demand may top 66,000 MW on Tuesday. The state’s all-time peak use of 68,379 MW was set in August of last summer during a protracted heat wave and drought…

ERCOT warned that rolling outages could occur this summer given the state’s limited amount of surplus generation…

Several idled power plants have been returned to service to bolster the summer supply after a new coal-fired plant expected to be operational was delayed.

NRG Energy (NRG.N), the state’s second-largest power company, has more generation available this summer than last, after restarting a half dozen older, natural gas-fired units totaling 1,100 MW that were previously in mothball status.

The one thing conspicuous by its absence in the entire Reuter’s article is the mention of all that wind power in Texas.

Texas is the number one wind-power state.  Still, the useable power from all those windmills (about 4,000 turbines in total) is only 6.38% of that peak demand.  Some 4,000 wind turbines to produce about 4,151 MW.  The same amount of electric power some 23 older, moth-balled, gas-fired power plants can produce.  Which is probably why they’re talking about rolling outages.  Because they’ve been building wind farms instead of useful power generation plants.  Fueled by natural gas.  And coal. 

Incidentally the capacity factor for a coal-fired plant is about 90%.  Where the only thing limiting its output is maintenance or low demand.  A nuclear power plant can have a capacity factor exceeding 100%.  For these reasons coal and nuclear power provide a large percentage of reliable power.  During peak demands natural gas-fired ‘peaker plants’ come on line quickly to provide for the extra demand when people come home from work and turn up their air conditioners.  While wind and sun add into the mix as more a novelty than a reliable power source.  With the capacity factor of solar power coming in on average around 12-15%.  In the south they may attain as high a capacity factor as 20%.  Like wind.  Making both of these a poor choice to provide additional power during peak demand.  Which is why Texas is firing up gas-fired ‘peaker plants’ to meet that peak demand.  Because they can.  While they have no way to make the wind blow or the sun shine on demand.

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