[If readers have other good sources and citations for electricity costs, please put them in the comments.]
I have known the New York Times energy reporter, Matt Wald, for 15 years, and generally think he is pretty good. But he has published perhaps the most flawed, inaccurate, and indefensible article in his career.
Wald’s piece could also be a poster child for award-winning journalist Eric Pooley’s searing critique of the media’s coverage of climate economics (see How the press bungles its coverage of climate economics — “The media’s decision to play the stenographer role helped opponents of climate action stifle progress”).
And, amazingly, as we will see, a report by one of Wald’s two industry sources completely disagrees with the report by the other industry group Wald cites! In fact, new Concentrated solar thermal power Solar Baseload is already competitive with new gas-fired generation and likely to have better economics in 2015.
The first flaw is that Wald completely ignores the lowest cost electricity strategy — energy efficiency — even though the article’s headline is “Cost Works Against Alternative and Renewable Energy Sources in Time of Recession,” and a major point of the piece is that “Curbing carbon dioxide emissions — a central part of tackling climate change — will almost certainly raise electricity prices, experts say.”
Wald never tells the reader that until the economic collapse, traditional sources of power have been rising much faster in cost than alternatives (see “Power plants costs double since 2000 — Efficiency anyone?“). He also never mentions that efficiency, which costs two cents to four cents a kilowatt hour (not counting ancillary benefits, including no need for new transmission), is the only new source of power that is both pollution free and far cheaper than current electricity rates (see “Efficiency, Part 3: The only cheap power left“).
The media simply needs to start talking more about electricity bills, which encompassses, efficient use of energy, than electricity rates.
Second, just as Pooley specifically warns against, Wald only cites industry sources for cost — and, surprise, surprise, they have absurd and indefensible numbers. Indeed, the clearest evidence article of bias is the utterly insupportable cost estimate for nuclear power Wald cites from a Black & Veatch study, “a new nuclear reactor, 10.8 cents.”
Matt, say it ain’t so. Let’s be clear here. That number is beyond unsupportable. There is not a utility or nuclear power plant provider in the country who would guarantee 10.8 cents/kwh in a Public Utility Commission (PUC) hearing. You would have trouble finding one that would guarantee twice that rate in year one of operation.
Let’s remember that “Turkey’s only bidder for first nuclear plant offers a price of 21 cents per kilowatt-hour.” Moody’s — a far less biased source than Wald cites — puts new nuclear at over 15 c/kwh (see here). Earlier this year, Time wrote “new nuclear energy is on track to cost 15¢ to 20¢ per kilowatt-hour,” and I published a detailed cost study this year that put it at 25 to 30 c/kwh (see “Exclusive analysis, Part 1: The staggering cost of new nuclear power“).
After Progress Energy tripled its cost estimate for its new twin 1,100 MW nukes to $17 billion last year, it warned state regulators its estimate for its planned nuclear facility is “nonbinding” and “subject to change over time” (see my May 2008 report, “The Self-Limiting Future of Nuclear Power“).
I recently debated Anndria Gaerity, Director for nuclear development at PSEG Power, and as anybody who was there can attest, she did not dispute my cost numbers nor the fact that no utility in the country would guarantee lower costs in a PUC rate hearing.
You can safely ignore all of Matt Wald’s numbers in the piece.
Third, Wald ignores numerous other credible sources that give very different cost estimates — including a study by one of Wald’s own sources! He cites Black and Veach that “A modern coal plant of conventional design, without technology to capture carbon dioxide before it reaches the air, produces at about 7.8 cents a kilowatt-hour.”
Well, again, I doubt you could find a coal utility to guarantee that price at a PUC hearing. Moody’s says it would cost more than 11 cents/kwh — and that assumes no cost for emitting CO2, another flaw in the article I will come back to.
Worse, Wald cites another industry study for costs in 2015:
The Electric Power Research Institute, a nonprofit consortium financed by investor- and publicly-owned utilities, predicted in November that even for plants coming on line in 2015, wind energy would cost nearly one-third more than coal and about 14 percent more than natural gas. The cost of solar thermal electricity, made by using the sun’s heat to boil water and spin a turbine, would be nearly three times that of coal and more than twice that of natural gas. (It would be almost double the cost of wind energy, too.)
According to a 2008 Sandia National Laboratory presentation, concentrated solar thermal electric power (CSP) costs are projected to drop to 8 to 10 cents per kilowatt hour when capacity exceeds 3,000 MW. The world will probably have double that capacity by 2013. A 2006 report by the Western Governors Association makes the same point, “that, with a deployment of 4 GW, total nominal cost of CSP electricity would fall below 10¢/kWh.” And that deployment will likely occur before 2015. Indeed, the report noted the industry could “produce over 13 GW by 2015 if the market could absorb that much.”
Or consider work done for the California Public Utility Commission (CPUC) on how to comply with the AB32 law (California’s Global Warming Solutions Act), online here. They put California solar thermal at 12.7 to 13.6 cents/kWh (including six hours of storage capacity).
And one comprehensive collection of different CSP cost estimates (here), notes that in Energy Technology Perspectives (2008), “the International Energy Agency says that CSP plants under construction are expected to generate electricity at between 12.5 and 22.5 US cents/kWh.”
Finally if you really want to see how one-sided and unsupportable Wald’s analysis is, read the 2006 report “Economic, Energy, and Environmental Benefits of Concentrating Solar Power in California,” for the National Renewable Energy Laboratory,” by … wait for it … Black & Veatch:
A comparison of the levelized cost of energy (LCOE) revealed that the LCOE of $148 per MWh [14.8 c/kwh] for the first CSP plants installed in 2009 is competitive with the simple cycle combustion turbine at an LCOE of $168 per MWh, assuming that the temporary 30 percent Investment Tax Credit is extended.
The ITC was extended 8 years in the bailout bill. But it gets better, since this analysis was really aimed at 2015 costs:
CSP plants installed in 2015 are projected to exhibit a delivered LCOE of $115/MWh, compared with $168/MWh for the simple cycle combustion turbine and $104/MWh for combined cycle plants. At a natural gas price of about $8 per MMBtu, the LCOE of CSP and the combined cycle plants at 40 percent capacity factor are equal.
And that is without a carbon price.
So I’m afraid Wald needs much better sources.
[Note: I’m not saying that apples to apples electricity cost comparisons are easy, especially projections six years from now. Only that Wald picked one’s that are one-sided and indefensible.]
Fourth, we are long past the time that a serious reporter can write an article about the cost of carbon carbon dioxide emissions and never bother once to mention any of the costs of not doing so.
Seriously, traditional media, if your cost-of-combating-climate-change articles repeat industry cost estimates, ignore obvious cost mitigation strategies that those writing climate bills have embraced, and never mention the cost of inaction — you are acting like industry flacks.
I guess it is time to repeat the key conclusions from Pooley’s “analysis of news articles published in national and regional newspapers, wire services, and newsmagazines between December 2007 and June 2008” for Harvard’s prestigious Joan Shorenstein Center on the Press, Politics and Public Policy (see here):
- The press misrepresented the economic debate over cap and trade. It failed to recognize the emerging consensus … that cap and trade would have a marginal effect on economic growth and gave doomsday forecasts coequal status with nonpartisan ones…. The press allowed opponents of climate action to replicate the false debate over climate science in the realm of climate economics.
- The press failed to perform the basic service of making climate policy and its economic impact understandable to the reader and allowed opponents of climate action to set the terms of the cost debate. The argument centered on the short-term costs of taking action–i.e., higher electricity and gasoline prices–and sometimes assumed that doing nothing about climate change carried no cost.
The end of Wald’s piece is unintentionally ironic:
No one likes higher bills. But the pain might not be shared equally: despite modest rate breaks for low-income customers, poor people spend a higher portion of their income on electricity than the rich.
First off, Wald inappropriately switches from talking about prices to bills here. Because of the aggressive energy efficiency strategies that Obama and Congress are pursuing, bills can stay relatively flat even as rates go up. But Wald has omitted any discussion of efficiency, so he should not have used the world “bills” here.
Second, regressivity exists only if the country doesn’t take the actions Obama and Congress have promised. But they have significantly ramped up funding for low-income weatherization, and they plan to use revenues from a cap-and-trade to pay for a tax cut for middle- and lower-income people.
“There are great benefits to the use of alternative energy,” said Jonathan Mir, co-head of the North American power utilities group at the investment bank Lazard.
But if Congress neglects the social issue, Mr. Mir said, a change in policy could fall hardest on those without a safety net.
Again, why is Wald quoting some industry source when Congress has already begun acting on the social issue? If Wald is going to write these incredibly stovepiped articles, where he doesn’t talk about global warming impacts or do any political reporting, then his articles will be less than helpful, and filled with biased quotes. But I love the final line.
“If it is deployed in an uneconomic way,” he said, “it is quite regressive in nature.”
In nature, what is regressive is a species using up all of the planet’s nonrenewable resources (water, fisheries, arable land, and so on), destroying a livable climate, and generally accelerating the extinction of most species on the planet. That is about as uneconomic as you get (see “Is the global economy a Ponzi scheme?“)
See also the Jerome a Paris post on DailyKos, which especially focuses on windpower economics, “NYT repeats coal talking points, try to sabotage Obama’s green energy plans.”