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Five U.S. Electricity Myths Debunked

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Myth 1: Wind and Solar Will Displace Coal

Although growing in importance, wind and solar power are not expected to displace coal in the years ahead because they are only available "when the sun shines" and "when the wind blows." The EIA's National Energy Modeling System doesn't forecast a wind and solar "explosion" as some want to claim because technical and physical limitations make them less reliable and more expensive. EIA-cited low capacity factors for wind (35%) and solar (23%), which often fall below 10%, are a constraining factor in our consumer-based society, where reliable electricity is needed on demand. Wind power, for instance, is best late at night when demand is lowest. Perhaps the best thing we can do for renewables is to move the focus away from deployment at all costs and center on more R&D to store electricity at utility-scale. Without greater storage options, wind and solar will remain much more "supplemental" than "alternative." Carnegie Mellon's Electricity Industry Center warns of a public backlash from higher costs if we try to install renewables too quickly: many Renewable Portfolio Standards are now being pulled back. Even our best costs estimates for renewables are often incomplete because they omit the requirement for new transmission and backup generation ("spinning reserve") that comes from more reliable fossil fuels. It must also be noted here that wind and solar energy are not "new," as many like to claim, but are among the oldest sources. The windmill goes back at least 3,000 years to ancient Persia (today's Iran), and the ancient Egyptians utilized solar energy to heat their homes. 

Wind and Solar Power Won't Displace Coal

Source: EIA, Annual Energy Outlook 2014

Myth #2: Fossil Fuels Get More "Subsidies" Than Renewables

The key here is the "bang for the buck," i.e., subsidies per unit of production. The Congressional Budget Office finds that nearly 80% and 54% of U.S. Department of Energy subsidies went to renewable energy projects in 2011. The tax breaks for fossil fuel companies, which are typically available to other domestic manufacturers, have an immense and immediate reward: fossil fuels supply over 80% of our primary energy. The Production Tax Credit will remain for 2015 and pays wind companies 2.3 cents for every kWh of electricity they generate. This seems strange since promoters continue to tell us how wind energy is now cheaper than fossil fuels (see here, here, here). And John Doerr, Al Gore's partner, has stated,  "our green investing doesn't depend on government policies." Apparently, he couldn't be more wrong: a change in tax subsidy plummeted wind capacity additions in 2013 to less than 10% of those added in 2012 (see EIA).

Federal Electricity Subsidies per Unit of Production

Source: EIA, 2011

Myth #3: Americans Will be Using Less Electricity: Beyond the well established "wealth is health," the critical problem with policies that increase the cost of electricity is that Americans will be using more electricity in the years ahead, not less. After all, we continually seek to grow our economy. The link between more money and electricity can be viewed from a variety of perspectives, but the two have long danced in tandem: 1) Economic and technological progress can drive power demand via more productivity or 2) the use of electricity itself can grow an economy by enhancing “the discovery, development, and use of new processes, new equipment, new systems of production and new industrial locations." There has been a strong correlation between GDP and electricity use over the decades, even while efficiency dramatically improved. We must not overstate the meaning of the recent flattening in U.S. power consumption: GDP per capita was also flat from 2007-2012. Unless personal economic stagnation is our new goal, the mid- and long-term overall trend for U.S. power consumption is up. America must be ready when pre-recession growth trends re-emerge, which is why an "all of the above" energy policy is so key.

U.S. Electricity Demand is Based on Money

Sources: EIA; USDA (Dr. Matthew Shane)

Myth #4: Only Renewable Energy Systems are Evolving

It's not only unfair but also illogical to pick energy winners and losers with policy. ALL energy technologies are evolving. Renewables won't be competing with conventional energy systems as they are now but as they will become. For example, "selective optimists" promote the potential of wind and solar while disregarding the potential for carbon capture and advanced coal generation to reduce emissions. Nobody knows the future. Researchers at Ohio State, for instance, have reached a milestone with coal-direct chemical looping, converting coal to heat in a sealed chamber that captures 99% of CO2. Many of these technologies are still emerging and shouldn't be forced into the market prematurely by environmental policy. Yet, we do know that past is prologue: for example, we've seen substantial environmental progress from the $110 billion plus investment in cleaner coal since 1990 alone.

The Absolute Decline in Coal Emissions..as Generation Soared

Sources: EIA; EPA

Myth #5: Europe is the Example to Follow

Many of our policymakers want us to simply "follow Europe's energy path," which installed the first large-scale carbon emissions trading program in 2005 and mandated a shift toward higher cost renewables. But, the European Union basically has flat population growth (the U.S. is adding 3.3 million people every year) and it has been a collapsed economy that helped many nations meet emission targets. Reduced options have led to higher electricity prices and a growing risky reliance on Russia. Germany, where residential power rates are triple those in the U.S., alone will hand out $31.1-billion of renewable energy subsidies this year. Grand plans for naturally intermittent energy, however, frequently don't pan out. Even The Washington Post, on the other side of the political spectrum, calls Europe: "a green-energy basket case." Policies that have upped the cost of energy in Europe have been so destructive that there are now entire organizations devoted to a new term: "fuel poverty." An unthinkable notion a decade ago.

A Picture Paints a Thousand Words (residential electricity prices per kWh)

Sources: EIA; Eurostat