It has long been a contention of mine that the most important reason that governments shouldn’t make economic decisions, such as favoring one form of technology over another or bailing out a failing company, is that politicians—who are first, last, and always in the re-election business–can’t make decisions for economic reasons. They can only make decisions for political reasons.
Consider a thought experiment. Say there is a national widget crisis and there are two possible technological solutions to the problem. Most people in the widget industry think that technology A is the better bet. Technology B, however, has been researched by a company that has its headquarters and 40,000 employees in the state represented by Senator Snoot, who chairs the Senate Widget Committee. Which technology do you think Senator Snoot is going to favor? To be sure, he might put the national interest ahead of his political interests and thus become a candidate for a sequel to Profiles in Courage. But there’s a reason that that famous book is a very short one.
One of the major components of the left these days, and by no means just in the United States, is the so-called environmental movement (so-called because it is, at heart, a misanthropic and anti-business movement, not an environmental one). And one of their current hobby horses is “renewable energy,” such as wind and solar power. Liberal politicians have relentlessly pushed for this, offering lavish subsidies and tax advantages, ($14 billion for wind energy in the United States alone in the last four years) even though wind and solar energy still cannot produce electricity at a cost that can compete with coal or natural gas on a per-kilowatt basis.
But over and above that, there is a huge problem with renewable energy sources that environmentalists and their political allies ignore. I’m not talking about the vast amount of land wind farms and solar arrays require, nor the environmental damage they cause by, in the case of wind farms, killing huge numbers of birds, nor the fact that wind and sun tend to be most abundantly found in areas where electricity demand is low, such as the high plains east of the Rockies, necessitating long, visually polluting transmission lines to where power is needed.
No, the number one economic problem in the electric generation industry is the fact that electricity cannot be stored. It must be generated at the moment it is needed. That is a very expensive fact, for it means that enough generating capacity must be built to meet peak demand, even though peak demand is encountered only rarely (such as on very hot summer afternoons). Much of the time, the excess capacity just expensively sits there.
But with coal, natural gas, or nuclear plants, at least that capacity can be called on whenever needed. That is not true of wind and solar. They generate electricity only when the wind is blowing and the sun is shining. So while theoretical capacity may be large, actual capacity can be anywhere from 100 percent to zero percent of theoretical capacity. Germany, for instance, is gung ho for renewable energy. The Telegraph (H/T Instapundit) reports that Germany has a theoretical wind generating capacity of 29 gigawatts, about one quarter of the country’s average demand. The average output of Germany’s wind generating capacity, however, is only 5 gigawatts, 17 percent of the theoretical amount.
Thus, in order to be sure the lights stay on, not only must Germany build an electric generating capacity able to deal with peak demand, it must build one able to deal with peak demand when the wind isn’t blowing. So instead of needing to be able to generate 100 percent of peak demand, it needs to be able to generate 100 percent plus whatever percent of the generating capacity is in renewables. Renewables, in other words, make the most expensive fact about the electric generating industry much more expensive.
It gets worse. Germany now requires that renewables get priority:
In fact, a mighty battle is now developing in Germany between green fantasists and practical realists. Because renewable energy must by law have priority in supplying the grid, the owners of conventional power stations, finding they have to run plants unprofitably, are so angry that they are threatening to close many of them down. The government response, astonishingly, has been to propose a new law forcing them to continue running their plants at a loss.
Electricity is at the heart of the new digital economy. As the New York Times reported this morning, the Internet is now using about 30 gigawatts of power. Much of that electricity is used to provide back-up systems to ensure no interruptions, because any interruption would be disastrous. And, according to The Telegraph, Germany is having increasing difficulty keeping its electric grid stable, thanks to its increasing reliance on renewables.
Invent (and patent) a way to store electricity in a cost-effective way, and you will become very, very, very rich. But until that happens (and it seems, at least at present, that the physics just isn’t there to allow that) renewable electricity capacity is, in fact, no capacity at all.