A recent study from Synapse Energy Economics (commissioned by the Sierra Club) claims that replacing the J.K. Spruce coal-fired power plant units owned by CPS Energy — San Antonio’s municipal utility — with wind and solar power “could benefit rate payers an average of $85 million each year from 2026-2040.”
Unfortunately, the Sierra Club and the press coverage surrounding the report fail to acknowledge a critical gap in the assumptions underlying the flawed narrative that wind and solar are rapidly becoming cheaper than fossil fuels for electricity generation.
When the report says that the levelized cost of wind is $17 per megawatt-hour and solar is $25 per MWh, it is only counting the cost to build the wind turbines and solar panels and hook them up to the grid. In reality, when we add wind and solar to our grid, we are paying for two systems: the renewable resources themselves, and the cost to firm them up — to provide backup power when the wind doesn’t blow and the sun doesn’t shine, and to cut production when there is too much wind or sun.
Until recently, the costs of this “second system” have been hidden because wind and solar have comprised less than 20 percent of Texas’ electricity production and the state has had ample reserves. But these costs will rise dramatically as we add more wind and solar to the Texas grid.
In other words, the more renewables we have, the less value they add because we are having to pay more for the second system behind them.
We already have evidence of this problem up Interstate 35 in Georgetown, which decided about five years ago to purchase enough wind and solar energy to classify itself as “100 percent renewable.” The city claimed it was going to save money by doing so but is losing millions of dollars and has raised electricity rates twice in the past five months. What happened?
What Georgetown failed to consider was the cost of the second system. First, because of the variability of wind and solar resources, the city has been forced to maintain a natural gas contract to provide energy during expensive peak load hours, when solar and wind output cannot cover its electricity demand.
But it is really getting hammered by the low or even negative nighttime prices caused by excess amounts of wind energy in the regions where its wind farms are located. The city bought fixed-price contracts — betting on stable or rising prices — and are now having to sell excess wind at night for huge losses.
Aside from using backup power to handle this variability, another way San Antonio could solve these second-system needs is to use energy storage, which is strongly supported by renewable energy advocates. However, the cost of storage could be billions.
Georgetown is, in a sense, fortunate that it can pay the market to supply extra electricity or absorb excess electricity and doesn’t have to rely on energy storage. CPS Energy, which provides almost 50 times the amount of electricity as Georgetown, cannot lean on the market to this extent and will have to procure an enormous amount of energy storage to make 100 percent renewable a reality.
Scale this problem up to the entire state, and you can see why 100 percent renewable is not doable, or at the very least would be unimaginably expensive.
Local leaders in San Antonio are considering a plan, known as the Climate Action and Adaptation Plan, or CAAP, which in part would retire the city’s coal- and natural gas-fired power plants and force residents to become more dependent on renewables. But the experiment in Georgetown did not work out well for ratepayers there, and San Antonio has more than 20 times the people who need access to reliable, affordable energy.
San Antonio officials and residents need to recognize the extreme cost of turning renewable energy into reliable energy and see through the false narrative being peddled by the Sierra Club.
This commentary originally appeared in the San Antonio Express-News on July 7, 2019.