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Renewable Energy Grid Parity Reality Check

Schalk Cloete's picture
Research Scientist Independent

My work on the Energy Collective is focused on the great 21st century sustainability challenge: quadrupling the size of the global economy, while reducing CO2 emissions to zero. I seek to...

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  • Jun 10, 2013

Grid parity has grown to become quite the buzzword in the renewable energy community. Indeed, as shown below, the latest estimates from the International Renewable Energy Agency (IRENA) shows that onshore wind is already at grid parity with fossil fuel electricity and that solar might be at grid parity in certain select regions by the year 2020.

This is sure to warm the hearts of many renewable energy activists. After all, when renewable energy reaches grid parity, we will finally see this “disruptive change” we have heard so much about.

Or will we?

Let’s take a look…

Grid parity today

The curious thing is that even onshore wind still requires substantial subsidies in order to be deployed. From the IEA data below, it is clear that onshore wind still received $21 billion in subsidies in 2011. Given that wind generated 437.4 TWh in 2011 (BP data), this amounts to an average of $0.048 per kWh – about 50% of current OECD fossil fuel electricity prices. If all electricity received this amount of support, it would cost more than a trillion dollars per year.

Following the same methodology, solar PV received an average of $0.47 per kWh in subsidies in 2011 – a whopping 500% of current OECD fossil fuel electricity costs. Yes, it is true that solar PV prices have dropped substantially in recent years, but, as shown below, very little of this drop has been due to technological advancements. The bulk of the price drop has been due to margin erosion where companies have been kept afloat through various forms of government support and desperate cost cutting across the board. Given this very unhealthy business environment, the recent reports of a large increase in defective PV panels should come as no surprise.

Even though it is conceivable that solar PV could eventually achieve grid parity with fossil fuel electricity through third generation technologies like organic PV, the chances of first generation panels (for which an enormous overcapacity has been subsidized into existence) ever achieving this milestone are slim to none. When the dust finally settles, this enormous first generation PV overcapacity will probably go down in climate change history as a deeply regrettable malinvestment.


But even if solar PV eventually achieves grid parity with fossil fuel electricity, onshore wind has proven that nothing (certainly nothing disruptive) will happen without the continuation of generous government support. There are many good reasons for this (discussed previously), but the intermittency issue is probably the most important of these.

Pricing in intermittency

Our modern society demands two things from its energy resources:

  • Energy must be made available in a highly refined form (e.g. electricity or gasoline)
  • Energy must be available on demand (whenever we flip a switch or pull up at a gas station)

Wind and solar power automatically cover the first point because they generate electricity directly. This is a very good thing and certainly counts very much in the favour of these technologies. When it comes to the second point, however, wind and solar become much less attractive.

Fossil fuels are different in that they cover the second point very well (built-in chemical energy storage), but fail to meet the first point. It therefore becomes clear that, while fossil fuels require expensive and exergy-leaking additional infrastructure to deliver highly refined energy to society, renewables require expensive and exergy-leaking additional infrastructure to deliver on-demand energy to society.

As a simple example, imagine that you could choose between $5000 of solar PV (about 2 kWp) and $5000 of coal (about 50 tons containing roughly five times the energy the PV will generate in 30 years). Under the constraint that you could not get energy from any other source, which one would you choose? If you choose the PV, you would be able to do a myriad of useful things for a few hours during the day, but be powerless at night. In addition, your energy would be very limited during long cloudy periods and, if you live a good distance from the equator, the winter months are likely to be very uncomfortable. If you choose the coal, on the other hand, you would not be able to charge your iPhone, but you would be able to cook your food and heat your home/water whenever you want. Which is the better choice? Tough one, isn’t it?

This is actually a pretty good analogy for our modern society. Fossil fuels are of limited use without the additional infrastructure required to convert them to highly refined forms. For example, 60% of coal and 40% of gas is currently used for electricity generation (with the rest mostly used for direct heating or other industrial applications). The situation is similar for renewables. We can probably get about 10% of our total electricity from wind and solar before we need to seriously start investing in additional infrastructure to accommodate the intermittency. Both these energy sources are therefore of limited use to us without costly additional infrastructure.

A more realistic benchmark for grid parity

For this reason, it is much more realistic to define grid parity not as the renewable energy price necessary to compete with fossil fuel electricity, but as the price necessary to compete directly with unrefined fossil fuels. The primary assumption underpinning this way of thinking is that the capital costs and exergy losses involved in fossil fuel power stations are similar to the capital costs and exergy losses involved in renewable energy storage mechanisms. Despite the uncertainties involved, this should be a reasonable assumption. For example, the latest EIA estimates give the capital costs of pumped hydro (currently easily the cheapest energy storage option) as roughly double that of a coal power plant.

In addition, the fact that wind and solar power only release energy over a period of decades while fossil fuels can be used whenever desired demands that future renewable energy generation be discounted. Back to the simple example given above, a discount rate is necessary because someone who chose the big pile of coal would be able to make large up-front energy investments in various profitable enterprises while the gradual energy release from solar panels would afford no such luxury. Discount rates of 5 or 10% are commonly used.

OK, so let’s calculate the price of solar PV that would be required to compete with coal at a price of $100/ton.

  • One ton of coal contains about 24 GJ of energy.
  • At a 5% discount rate, 24 GJ today is worth 1.53 GJ of solar power per year for 30 years.
  • At an average capacity factor of 15%, one would require 323 Wp of solar PV in order to produce 1.53 GJ of energy per year.
  • Buying 323 Wp of solar PV for the same $100 paid for a ton of coal would require a price of $0.31/Wp installed.

This implies that, under these assumptions, installed PV prices would have to fall to $0.31 per Watt in order to reach grid parity with coal.


According to this way of thinking (comparing intermittent renewables directly to unrefined fossil fuels), energy from solar PV is currently about one order of magnitude more expensive than energy from coal. Naturally, this is just a rough estimate which will vary substantially depending on many factors, six of which will be further explored in part 2 of this post.

However, the central point is quite clear: Objectively speaking, intermittent renewables are still very far from challenging fossil fuels as the preferred energy source of our industrialized civilization. Some tremendous technological breakthroughs will be necessary to change this outlook and such amazing advances, if they are even possible, are likely to require many more decades of basic R&D. 

james filippi's picture
james filippi on Jun 10, 2013

Found some interesting video n links with regards to what is happening in California with fuel cell technology and municipal wastewater treatment plants… Impressive to say the least… they are creating 3 value streams of hydrogen, electricity and heat all from a human waste!  Just wanted to share what I found…

“New fuel cell sewage gas station in Orange County, CA may be world’s first” “It is here today and it is deployable today,” said Tom Mutchler of Air Products and Chemicals Inc., a sponsor and developer of the project. Microsoft Backs Away From Grid
2.8MW fuel cell using biogas now operating; Largest PPA of its kind in North America



I K's picture
I K on Jun 10, 2013

There is another factor to consider, if you subsidise new generation be it wind or nuclear you will likely find that the price of wholesale electricity drops as you have just introduced another competitor. This is of course very hard to calculate but to try and take an hypothetical example

Imagine 500TWh of wind (or nuclear) was subsidised into existence and imagine this resulted in 500TWh less demand in coal. Coal goes from ~2000TWh to 1,500TWh annual generation. This fall of 25% in coal demand will have quite an impact on the price of coal. That means the remaining 1,500TWh of coal generation pays lower prices for its coal.

This is a cost saving to the end consumer which should be reduced from the calculation of the subsidy paid by the end consumer. Of course an individual wind farm will have negligible impact on demand and hence cost of input fuels but combined a large build of wind or nuclear would lower fuel input costs for all the other plants and in doing so the subsidy may well pay for itself.

I K's picture
I K on Jun 10, 2013

How many OTEC devises have been built to date and what is the total sum of energy derived from this tech to date?

Rob Flynn's picture
Rob Flynn on Jun 11, 2013

The assumption is that once at grid parity, renewables will be operating on a ‘level playing field’ with subsidy free technologies. This is patently not the case.

The IEA’s World Energy Outlook 2012 puts worldwide fossil fuel consumption subsidies at $523billion in 2011. The figure for renewables support amounted to $88 billion. And subsidies to nuclear, a 40 year old technology whichr receives more support than any other, is staggering. The UK in fact are at the moment signing up for another 40 years of subsidised nuclear power.

Bill Woods's picture
Bill Woods on Jun 11, 2013

If you want to do an apples-to-apples comparison, figure out the cost of hydrocarbon fuels synthesized using OTEC power. 

Bill Woods's picture
Bill Woods on Jun 11, 2013

The bulk of those subsidies are in oil-producing countries, which sell oil products to domestic consumers for a fraction of what they could get on the world market. For the US, subsidies for fossil fuels work out to about 0.2 ¢/kW-h — less than 10% of what renewables get. Subsidies for nuclear are even lower. 

Schalk Cloete's picture
Schalk Cloete on Jun 11, 2013

As Bill said below, the bulk of these subsidies are in oil & gas exporting countries where energy is simply priced closer to the actual extraction cost. The fact is that many oil & gas exporters with large conventional reserves can still extract oil for $20/barrel. From this point of view, I find it a bit weird to label domestic prices of $30/barrel as a subsidy simply because the product is still priced higher than its cost of production. Subsidies for renewables are pure subsidies which allow the product to be sold for less than the cost of production. 

One can understand why oil & gas exporting developing countries would do this. Cheap energy is a prerequisite for rapid economic growth and selling oil domestically at prices five times the cost of production would severely stifle this growth. Anyway, they have every right to consume more of their own fossil fuel resources at the expense of oil importers. 

On the other hand, one can also understand the point of the IEA. These subsidies lead to an overall less efficient use of the world’s limited reserves of cheap conventional fossil fuels – something which can have serious long term consequences. 

The point of this article remains unchanged, however. Fossil fuels, even when priced at global market prices (a price reflecting the most expensive fossil fuels on the market) remains much cheaper than renewables. 

Rob Flynn's picture
Rob Flynn on Jun 11, 2013


Schalk Cloete's picture
Schalk Cloete on Jun 11, 2013

Jim, if OTEC ever gets to the stage of multi-GW yearly installations (where solar and wind are now), I will definitely pay more attention to the technology. Until that time, very large scale OTEC remains nothing more than a theoretical idea which I find very difficult to imagine.

I can imagine a few OTEC plants located a few kilometers offshore like an offshore wind farm, but deriving the bulk of world energy from tens of thousands of superstructures located thousands of kilometers offshore just sounds totally impossible to me. A thousand kilometers of on-shore HVDC cabling costs in the order of $1 billion. Just imagine what this will cost in the deep ocean. The cost of subsea hydrogen pipelines will be even more astronomical. And then there is of course the construction and maintainence of the massive fleet of deep ocean OTEC plants within the timeframes given by climate science…

Most renewable energy analyses see ocean energy as nothing more than a marginal source. Until I see the contrary being proven in the real world, I will have to agree with this view. 

Schalk Cloete's picture
Schalk Cloete on Jun 11, 2013

I think that is the point. The OTEC produced hydrogen will have to be cost competitive with fossil fuels before any replacing can occur. 

Bill Woods's picture
Bill Woods on Jun 11, 2013

But the usable energy removed from the ocean ultimately turns back into heat. And quite quickly if it’s used to make hydrogen or some other fuel. 

Nathan Wilson's picture
Nathan Wilson on Jun 12, 2013

This article brings up some good points, but I still prefer to use as a benchmark, the cost of renewables plus storage.

One reason is that by treating storage separately, it is easy to optimize the wrong parameter.  It has always been true that concentrating solar power with thermal energy storage is cheaper than PV with batteries.  Even so, the renewable movement has convinced many nations that putting solar panels on roofs is going to somehow allow them to break their addiction to fossil fuels.

It has gotten to the point that Desertec (the plan to supply Europe with solar power from the Middle East and North Africa) is nearly dead, but few Europeans realize that means that solar will definitely not provide the majority of their electricity (because their local solar plants have low capacity factor), and they will continue to need most of their fossil fuel plants.

Schalk Cloete's picture
Schalk Cloete on Jun 12, 2013

True, it is definitely more accurate to calculate the real cost of renewables plus storage, but it is also much more challenging to do. This is the reason why renewable energy advocates can so easily get away with simply neglecting the intermittency issue and claim grid parity with baseline power. This article simply proposed a very simple alternative way of thinking that can help to more accurately value current renewable energy technology. 

Yes, I am pretty worried about Europe’s energy future too. Wind is useful in some places and solar can work to some extent in Southern Europe, but aside from that there is little choice other than fossil and nuclear. Desertec is a nice idea, but I think the political implications of electricity reliance on North Africa will probably prove to be a real show-stopper in the end. 

Brian Reynolds's picture
Brian Reynolds on Jun 14, 2013


Thank you for the article.  Two quick points.  Your math on the subsidies appears to be a direct calculation of wind subsidies / last year’s production = $0.048/kwh.  The problem with that is that those subsidies are largely for capacity building.  That would mean that you’ve front loaded the cost of the lifetime of production into your figure for one year’s energy which gives you an incorrect number.  

Second, the entire arguement for renewables is silly if you don’t value carbon.  It’s just not an intellectually valid arguement to say that carbon-negative and carbon-intensive processes should be valued the same.

Jim Stack's picture
Jim Stack on Jun 14, 2013

The cost to the environment and water use for Fossil fuel is huge. Nuclear is deadly and 90% of the Uranium that has to be dumped every 18 months is from Russia ! Our 104 Nuclear Plants ran out of room for on site storage, So they now allow more on site storage , dumb and dumber !

Renewables with some Hydro can run the world and we will still have a world.Most homes and buildings are SO INEFFICINET they need 4 times the energy of a clean greeen building. We have to be smarter and work together !

Lewis Perelman's picture
Lewis Perelman on Jun 15, 2013

Excellent analysis, Schalk. Your rebuttals too. Overall, a valuable reality check.

Schalk Cloete's picture
Schalk Cloete on Jun 15, 2013

Thanks Brian. I understand your point. For example, the US PTC is less than half of the $0.048/kWh mentioned in the article. However, it becomes quite complex when one distinguishes between types of subsidies and has to start adding interest to capital subsidies. In the end I think it is a reasonable assumption to just divide the amount of extra money that taxpayers pay in any given year by the amount of clean energy they get in return. 

Regardless of these technicalities, however, the point of that paragraph remains unchanged: even though wind has been at grid parity for many years already, it cannot survive in an open market without substantial subsidies, not even at very low penetration rates where the law of receding horizons is not yet at play. The scary job loss projections given by the US wind industry when the PTC was under threat from the fiscal cliff demonstrates this point.  

A carbon price is one of the variables I will look at in the next post. Stay tuned. However, I would like to learn more about these carbon-negative processes you speak of. 

Schalk Cloete's picture
Schalk Cloete on Jun 15, 2013

The whole point of the referenced article is that the second law counts against renewables because of their diffuse nature. OTEC is probably one of the most diffuse forms of renewable energy out there. 

The highly concentrated nature of fossil fuels and the large temperature differences they can generate allow for relatively small process units and relatively high thermodynamic efficiencies. Diffuse renewables are the exact opposite, requiring enormous process units (or enormous areas covered by small process units) operating at a low efficiency. 

Alain Verbeke's picture
Alain Verbeke on Jun 15, 2013

” Objectively speaking, intermittent renewables are still very far from challenging fossil fuels as the preferred energy source of our industrialized civilization. Some tremendous technological breakthroughs will be necessary to change this outlook and such amazing advances, if they are even possible, are likely to require many more decades of basic R&D.  “

Objectively, I would advise you to go work in the real world, where your ‘scientific ivory tower’ arguments are debunked every day….. Since it is a week-end day, I won’t was my time with long arguments, but simply post some activities and studies done by private entreprises debunking your statements . . .
June 07, 2013. The New Mexico Public Regulatory Commission has given its blessing to the proposed power purchase agreement (PPA) between First Solar and El Paso Electric Power, for what will be the state’s largest solar power plant (50MW). Then there’s the 25-year PPA itself, which in a rare occurrence
was made publicly available and still are: 5.79 cents per kilowatt-hour (kWh), well below the average price of new coal plants.
June 06, 2013. Germany’s Conergy, a vertically integrated PV manufacturer and developer, is now installing PV systems in Spain that are producing electricity at grid-competitive rates without subsidies. The company said it’s now hit the 1 megawatt mark of such projects. Spain has joined a growing number of countries where solar is becoming as cheap as other electric sources on the grid without subsidies, among them South Africa and

June 2013. Brazil’s surge in a solar power focus has come (incidentally or on purpose) in conjunction with the upcoming FIFA World Cup that will be located there. But one of the key drivers of solar in Brazil is that it has become cheaper than the cost of grid electricity in the country. In December 2012, we noted an influx of 21 solar power project applications in the country totaling nearly 1,000 MW (1 gigawatt) of solar power capacity. In mid-May 2013, 13 requests were put in for the 392.4 MW total mentioned above, following about 300 MW across 12 requests not long before that.

May 28, 2013. Morocco on May 10th officially launched the construction of a 160-megawatt solar power plant near the desert city of Ouarzazate, the first in a series of vast solar projects planned in the country.Meanwhile the country is also ploughing ahead with a programme to boost wind energy production, particularly in the southern Tarfaya region, where Africa’s largest wind farm is set to open in 2014.

The kingdom, which has no hydrocarbon reserves of its own, hopes to cover 42% of its energy needs with renewable sources by 2020, and has launched a plan to produce 4,000 megawatts.

Half of this will come from solar energy while wind power will supply the remaining 2,000 MW, and Morocco’s wind-blown southern coast, where many of the new farms will be built, already resembles a huge building site. Wind cheaper than gas, says E&Y

Michael McGovern, Windpower Monthly, 15 October 2012

The net cost of European wind power is up to 50% lower than that of its main conventional power rival, combined cycle gas (CCGT), according to a comparative study by financial group Ernst & Young (E&Y).

In Spain, the costs required to produce 1MWh will generate Eur56 of gross added value from wind, as opposed to Eur16 from CCGT, says the study.

Gas is costlier in countries dependent on imports. But even in gas producing UK, E&Y places wind’s net cost only slightly above gas, at Eur35/MWh against Eur31/MWh, respectively.
Across the six European focus countries (Spain, UK, France, Germany, Portugal and Poland), wind’s net cost is competitive and, extrapolated across the UE26, cheaper. By factoring in returns to GDP, like jobs and local taxes, E&Y’s analysis challenges the power sector’s levelised cost of energy (LCOE) standard, which always places wind costs higher, mainly due to upfront costs.

08 Feb 2013 – Research from Bloomberg New Energy Finance (BNEF) reveals that unsubsidised wind farms can undercut electricity sold by new coal or gas-fired power plants in Australia. Electricity from wind farms cost A$80/MWh, and new coal or gas plants (subject to a carbon tax) cost A$143/MWh and A$116/MWh respectively. When the impact of the Australian carbon tax is stripped out wind power is still 14 per cent cheaper than new coal and 18 per cent cheaper than new gas. The cost of wind power in Australia has fallen 10 per cent since 2011, while the cost of solar PV has fallen 29 per cent, aided by the global glut in solar panels. Meanwhile, the cost of new coal plants is rising as a result of high financing costs and investor fears over long-term reputational and legislative risk, and the cost of gas is being driven up as Australia expands its liquefied natural gas export capacity, giving gas suppliers access to global markets. Investors are unlikely to support new fossil fuel power plants, new coal-fired power stations are just too expensive now, compared to renewables. Even baseload gas may struggle to compete with renewables. Australia is unlikely to require new baseload capacity until after 2020, and by this time wind and large-scale PV should be significantly cheaper than burning expensive, export-priced gas.


Lewis Perelman's picture
Lewis Perelman on Jun 15, 2013

Brian, technically you raise a fair point about the nature of current wind subsidies. But correcting it leads to further complications. If you prefer to compare total cost of ownership or lifecycle costs, you have to do it equivalently for all alternatives. For one, nuclear power’s costs also tend to be front-loaded: construction is expensive but fuel and operating costs tend to be modest. The Breakthrough Institute has published a number of articles recently arguing that nuclear power is significantly more cost-effective than solar or wind. And it effectively is carbon-free too, so that argument does not apply.

Beyond that, comparing net present value of energy options requires making assumptions about future financial, policy, and other factors that are fraught with uncertainty. Subsidies are created by policies that can and do change — or fail to — in ways that differ from official rhetoric. Financial crisis led to subsides for renewables being cut back in some places sooner than expected. Other subsideies, e.g., for biofuels, persist despite broad political support for eliminating them. Negative public attitudes sparked by the Fukushima disaster caused some countries to freeze or undo nuclear power development. And so on. The existence of such uncertainties itself imposes a risk penalty on current investment decisions.

So your assumption that wind subsidies, for instance, will remain targeted on ‘capacity building’ may not be reliable. ‘Mission creep’ and inertia are not unknown in public policy. Once a constituency dependent on government subsidies acquires sufficent mass, it is likely to lobby to maintain or add subsidies for whatever rationale will work.

Consider the Price-Anderson Act, designed to indemnify utilities that bought nuclear power plants, which was passed in 1957. Wikipedia notes: “The act was intended to be temporary, and to expire in August 1967 as it was assumed that once the companies had demonstrated a record of safe operation they would be able to obtain insurance in the private market.” You may have noticed that 56 years later, the subsidy is still around, despite a great deal of nuclear power capacity having been built in the interim.

In Virginia, where I live, politicians have been arguing lately — next year there’s an election here — that it’s time to repeal a much-disliked gross receipts tax on businesses. The tax was originally imposed to help pay off debt from the war……..the War of 1812.

Schalk’s essential argument remains valid: A notion of ‘grid parity’ which compares costs of solar/wind power under ideal conditions to the costs of conventional power under real conditions is fundamentally erroneous and misleading. The intermittent, unreliable nature of solar and wind and some other ‘renewable’ power options imposes a negative risk premium that utilities must and do factor into real decisions. Even subsidies cannot remove the tangible costs of backup or storage.

Hence, you conclude that “the entire argument for renewables is silly if you don’t value carbon.” But that is overly simplified, and not really true. If you do value carbon, nuclear power looks like a more cost-effective option. So too does traditional hydropower — which effectively is as ‘renewable’ as anything else, but which many environmental activists insist is not. 

Alternately, there are other reasons — social, political, economic, environmental, strategic — to make a case for renewable energy sources, even if carbon is not considered at all. In the US, the Solar Energy Research Institute was established by Congress in 1977 during the Carter Administration. (I was one of its first employees.) At the time, there was little interest in global warming — if anything, many scientists were warning of the threat of global cooling. The main reasons for the policy goal of the Carter administration to expand use of renewable energy focused on oil dependency and the lingering threat of another OPEC embargo. That, and a popular view within an increasing influential environmental movement — stoked by Amory Lovins among others — that nuclear power was dirty and dangerous. Those concerns were further inflamed in 1979 by another oil embargo and the Three Mile Island accident.

Those issues persist today, along with concerns about air and water pollution, acid rain, oil spills, mining accidents and many other interests that affect energy policy, completely unrelated to global warming or carbon emissions.

Lewis Perelman's picture
Lewis Perelman on Jun 15, 2013

I just came across this Economist article which is pertinent to the arguments here about wind subsidies:

Along the line of my point that valuing carbon is not essential to promoting renewable energy options was this in particular:

Some of the most enthusiastic Republican supporters of the PTC do not even acknowledge that climate change is happening. Karl Rove, a former adviser to George W. Bush, and Charles Grassley and Steve King, respectively Iowa’s senior senator and fourth-district congressman, have all campaigned for the wind-energy credit but have expressed opinions about climate change ranging from ambivalence (“The science is confusing”) to downright hostility (“Climate is gone”). A number of other groups, such as the US Chamber of Commerce, support the credit but lobby against climate-change legislation.

Lewis Perelman's picture
Lewis Perelman on Jun 15, 2013

AV, your comment seems to imply an assumption that ill-conceived, imprudent choices cannot be popular; hence the popularity of a choice is evidence that is not ill-conceived or imprudent.

The global financial debacles of 2008 provide contrary evidence.

Schalk Cloete's picture
Schalk Cloete on Jun 16, 2013

Thanks AV, but I would like to believe that the view from my “scientific ivory tower” (a.k.a. the scientific literature) is much clearer than the picture painted by pro-renewables websites. For some perspective, consider that you will need about 100 of those 50 MW solar plants to equal one standard coal plant commissioned roughly every two weeks in China. 

I fully accept that, if you simply neglect the intermittency issue, cheap Chinese solar panels are approaching parity with coal-fired electricity in the most sunny locations. However, as I will discuss further in the next article, this is true only while solar PV remains a very small marginal source. Also, if cheap Chinese panels are ever to challenge coal, they should take on cheap Chinese coal-fired electricity at around $0.04/kWh. One should also consider that Chinese panels are often sold below the price of production and that a large portion of these panels are now starting to show defects. 

Alain Verbeke's picture
Alain Verbeke on Jun 16, 2013


For some perspective, consider that you will need about 100 of those 50 MW solar plants to equal one standard coal plant commissioned roughly every two weeks in China.  Also, if cheap Chinese panels are ever to challenge coal, they should take on cheap Chinese coal-fired electricity at around $0.04/kWh. One should also consider that Chinese panels are often sold below the price of production and that a large portion of these panels are now starting to show defects.  “


For some perspective, a decade ago, european solar PV power plants (not the same as CSP solar plants) were about 50x more expensive per produced kWh than “cheap” chinese coal plants. Today, a decade later, european made quality solar PV panels are competing in Spain with fossil fuel generated power plants kWh’s, without any subsidy forked over. And in sun basked north African countries, it is now cheaper to use them than to import coal to produce electricity, yes, the Desertec initiative is not active anymore, but the Maghrebians are constructing it anyway for their own needs, how hilarious is that….


The same scenario happened with european wind turbines in the 1980’s, when they generated electrons at $60 cents/kWh, today doing the same for $6-9 cents/kWh, when unsubsidized. That is a 10x lower price tag achieved in 30 years….


Have you recently been in the field, or talked to RE actors active in that sector ? I have. Still busy. That is why I say that you ‘ivory tower scientists” bureaucrats have no clue about what is happening in the real world. The large portion of the Chinese PV panels showing defects are a joke perpetuated by bureaucrats like you, unless you think that the few thousands panels now showing defects and being replaced by new ones for free (part of the insurrance scheme included in each buy contract) are a huge amount compared to the three million PV panels globally produced each year since 2010….


You also talk about cheap chinese coal power, have you included the economic cost of Chinese free breathing air so polluted by the numerous coal power plant smoke stacks exhausts? Measured Beijing air quality is now so bad during winter, that it exceeds by a factor 8 the air quality deemed to be breathed safely by humans, requiring people to stay indoors for weeks on a stretch to survive the foul air, or wear oxygen masks while travelling to work… Or the overal cost of the few hundred deads by coal mining accidents every year in china ? Or the thousands of chinese babies dying each year from asthma related issues?

Yes Gimme more coal, pleaaaaaassse, gimme me more coal……  I would die to get it……..


Yes, you “ivory tower scientists” are living in a parallel universe, not understanding that fossil fuels are a finite quantity, and that we humans need proper alternatives to that finite energy resource, before it is too late. And that it require investment in alternatives energy resources, to make them cheaper and cheaper, using economies of scale to reduce their price per item, one item at a time.

That is exactly what is happening now with solar PV panels since 2000, as has happened with wind turbines before, and will continue to happen with other RE power resources…. leading them to mass applications, over millions of home roofs or in nearby fields, and put up by millions of people all over the world who had previously no access to electricity, because their government could not afford to build a huge coal power plants and the required electricity distributiion network, in the process decentralising the 20th century centralised power plant production arrangement, leading to a more sturdy global energy supply.


By the way, I am a shareholder of EcoPower cvba, a cooperative producing electricity sourced solely from renewable energy, located in Belgium, sending me electrons cheaper to my home TODAY than the ones sourced by 100% imported coal or natural gas using power plants also located in Belgium. Ecopower cvba uses several venues to achieve that goal, look it up on their English section of their website. And solar PV and wind are only a part of their total energy supply mix to generate electrons. And no, I have no long hair, don’t wear sandals and a flower t-shirt, always do vote right, and hate tree hugers and their communist mindset.


Local nuclear power and fossil fuel energy user competitor Electrabel is now in 2013, 25% more expensive per delivered kWh to my home than EcoPower cvba, that is why I switched supplier in 2004, and why I installed in 2010 quality solar PV panels made in Europe on my home roof (Bisol panel, made in Slovenia, for the same price as chinese imported competitor alternative price quotes, and the 2 inverters are from SMA, Germany..).


The solar PV panels cover 100% of my yearly electricity needs, rendering my yearly electricity bill = zero, and will be paid off in 2020, after that producing FREE electricity for another 30 years, since they degrade at a factor of 0.005 per year. Try to get that deal from you coal power plant energy supplier. They panels are producing kWh’s today, in a northern country like Belgium, at a price almost at local grid parity, when substracting the subsidies I get from my government.


By the year 2020, knowing that Belgium imports 100% of it’s fossil and nuclear fuel at very expensive and still climbing prices, depending totally on the goodwill of foreign energy suppliers, I am 100% certain that my decent european made solar PV panels will be producing kWh’s at far below non-renewable power plants kWh prices by 2020….


Electrabel’s nuclear plants are now over 40 years old, and some will be closed off because their concrete caskets and other equipment are showing serious expensive to repair damages, others will have their control rooms etc revamped to last another 10 years, but no new ones are foreseen to be built in the future, way too expensive today… at 14 euro cents/kWh forecast price, requiring a decade to be built before being started up, and then requiring at least 20 years of constant 24/7 fixed price power take off to recoup it’s multi billion euro price tag, before starting to turn a profit for it’s owner 30 years after the first shovel in the ground…. 

See what is happening in USA’s Georgia state with the Vogtle new built nuclear power plant, twice over budget halfway through the construction, twice of planned construction time schedule, and the PPA (power purchase take-off agreement) already deep in the red, meaning this plant will never turn a profit to it’s owner….


But yes, that require forking over your own money to discover it all, instead of ‘anal ysing’ the sector from an office desk … What a nice perspective you have with your sheets….Mao Tse Tung once said that with paper, you could prove anything. You just managed to do that, congratulations…..

In the meantime, here’s what is happening in the real world:


April 8, 2011 – Off-Grid Solar Solutions Shine in Low-income Rural Cambodia.


There are currently over a billion people who live in remote villages and lack access to electricity. Together they spend billions of dollars each year just to have light (using kerosene lamps/candles/batteries/diesel generators…). Solar products such as solar lanterns, small solar systems and solar powered water pumps, are proving to be cheaper solutions for answering their energy needs.


In rural Cambodia, where about 11 million people live beyond the reach of electric grids, most villagers rely on one of two sources for lighting: kerosene lamps, which serve nearly half of this off-grid market, or automobile batteries, which villagers use if they have a bit more money and seek energy for lighting, cell phone charging and watching television.

But there are downsides to these two solutions. Villagers explain that the open flame kerosene lamps often burn their children. And although using automobile batteries is safer, it requires frequent trips to diesel-powered charging stations to recharge the battery.


Currently, for the average family here, fuel expenditures on a kerosene lamp are about $30 annually, while a solar lantern that lasts for two years costs only $25. For richer Cambodians who use more energy, buying a solar home system has proven to be an economic choice compared to automobile batteries. According to the Asian Development Bank, the cost for a solar home system in Cambodia ranges from $200 for a 20-watt system to $600 for an 80-watt one.


Interviews with villagers demonstrate that their investment in solar home systems usually takes three years to pay back. And solar home systems are becoming more cost competitive as diesel fuel costs escalate. During the last six months, the recharging fee of automobile batteries has already gone up by 25 percent due to rising fuel costs in the country.


Payment Solutions Designed for Rural Poor. One popular practice is to partner with local micro loan providers who can loan villagers the money to purchase solar lanterns or solar home systems. Villagers can then gradually repay the loans through savings on kerosene or automobile battery recharging fees.


For those who don’t want the loan, there is another way to embrace solar energy. Last year, a local solar company, Kamworks, rolled out a rental service that allows villagers to rent a solar lantern at a daily rate of 8 cents, roughly the daily rate for kerosene.


Distribution remains a barrier. It is hard to reach and provide after-sales services to villagers scattered in remote areas. It is sometimes villagers themselves who handle the marketing and distribution setbacks. Duc Vy is one such case. After hearing of his friend’s positive experience with solar energy, Duc travelled three hours by bus to the nearest solar company and bought a solar home system. A half-hour training session at the company plus an illustrated guidebook turned the then 53-year-old truck driver into a solar installer, at least for his own house. The solar system has been working well since he mounted it on the roof three years ago, said Duc as he greeted neighbors who came by to watch television powered by the sun.


2010.Kenyan Women Light Up Villages with Solar Power. Currently, only 20 percent of Kenyan households are connected to the national grid. Patrick Nyoike, the Permanent Secretary in the Ministry of Energy, said it is virtually impossible to connect every Kenyan household to the national grid system by 2030 due to the huge capital investments needed. According to Zachary Ayieko, the CEO of REA, solar energy offers a huge power potential for the nation since solar energy in Kenya could potentially generate up to three times the current daily national grid requirements. Though the initial costs of a solar kit are higher as compared to kerosene lamps, the overall cost of the solar kits is lower because there are no operational costs attached to them.

“Prices range between $10 and $93 for the solar kits depending on their capacity as compared to the monthly average of $10 spent by each household on kerosene,” said Arthur Itote, the project manager at the Lighting Africa Private Enterprise Partnership for Africa (LAPEPA). Joyce Matunga says that the solar energy kits can also be used to power irrigation pumps. This, she said, would be a big step forward as the farm produce would then generate income for poor households and the ripple effects across the villages will be poverty alleviation as a long-term benefit. According to research conducted by GFSIT, village women spend between Kenya Shillings (Kes) 850 and 1,200 [approximately US $10 to $15] every month on lighting alone. The women, notes Ndiege, use various sources such as paraffin and firewood to light up their homes after dark and to cook food.


“This has negative effects on the environment as they have to cut down trees for firewood, while paraffin poses health risks to the women and their families on inhalation of the harmful fumes from paraffin lamps,” said Ndiege. “In that case, we identified solar energy as the most affordable alternative energy source that we could use in the villages. We partnered with the Barefoot College in India, which trains semi-illiterate rural women to fabricate, install and maintain solar lighting systems in the villages.”


Ndiege said that the women acquired vital solar engineering skills that they are currently applying in the remote villages of Olando and Got Kaliech. Under the Village Solar Committees (VSCs) program, village folks will contribute between Kes 500 and 800 [approximately US $7 to 10] in monthly subscriptions from each household to keep the program running.


“The village women have also started income generating activities that include a posho mill that is powered by solar energy to generate some income for the women groups and a small workshop where local youth can gain skills and eke out a living while supporting the village solar program as well,” explained Ndiege.



Alain Verbeke's picture
Alain Verbeke on Jun 16, 2013

” AV, your comment seems to imply an assumption that ill-conceived, imprudent choices cannot be popular; hence the popularity of a choice is evidence that is not ill-conceived or imprudent. The global financial debacles of 2008 provide contrary evidence. “


Are you refering to the Fukushima nuclear power plant, where the tsunami perimeter walls were foreseen for 5 meter waves, and not the 10 meters waves that really happened, where seismic fundations were foreseen for a 6 richter scale earthquake and not a 7.2 really happening, and where the cooling water circuit for the stored spent fuel rod swimming pools was not designed to work by simple gravity feeding (pit below sea level), requiring operating electrical cooling pumps to stop working, because the backup electricity diesel gen put on the ground floor were swamped by the incoming tsunami waves, thus leading to the explosion of the whole stuff due to lack of cooling water ?

or are you refering to the Korean scandal with the nuclear plant maintenance (30% of their power production capacity), where the nuke power plant owners falsified maintenance records and replacement part quality check records, to save on maintenance expense, while lining their pockets handsomely ?

Or are you refering to the close down of the many just newly built natural gas fed turbine power plants in Europe, because they can’t compete with intermittent spread out cheaper renewable wind and solar PV and hydropower and biomass and geothermal, and are not able to compete with written off baseload nuclear and coal fuel using power plant imported from the USA ?

have a nice weekend. The world will continue turning, and power supply will continue to grow, until we run ouf of fossil fuels and nuclear plants are ubiquitous everywhere.

Alain Verbeke's picture
Alain Verbeke on Jun 16, 2013


” Yes, I am pretty worried about Europe’s energy future too. Wind is useful in some places and solar can work to some extent in Southern Europe, but aside from that there is little choice other than fossil and nuclear. Desertec is a nice idea, but I think the political implications of electricity reliance on North Africa will probably prove to be a real show-stopper in the end.  “

Here another batch of articles to debunk your statements:

According to an agreement with the EU, Norway must step up the share of renewable energy in gross final energy consumption to 67.5 percent by 2020, an increase of 6.4 percentage points from 2010. The Nordic country gets 99 percent of its electricity consumption by running water through turbines.

The three countries which had the highest share of renewable energy compared to total energy consumption were Sweden, Finland and Latvia, with 44.4 percent, 30.5 percent and 29.9 percent of renewable energy sources in total consumption respectively.

Posted April 15, 2013. Portugal Achieves 70 Percent Renewable Energy in First Quarter.

Renewable electricity accounted for the 24.5% of all electric energy produced in Italy in 2011. The Italian National Renewable Energy Action Plan has a target to reach the total share of renewable energies to 26%. 39% in the electricity sector, 17,09% in the heating/cooling sector and 14% in the transport sector by 2020.

The Energy Bill 2012 -2013 aims to close a number of coal and nuclear power stations over the next two decades, to reduce dependence on fossil fuels and has financial incentives to reduce energy demand. Renewable energy sources provided for 6.7 per cent of the electricity generated in the United Kingdom in 2009, rising to 9.6% in the second quarter of 2011. The UK Government’s goal for renewable energy production is to produce 20% of electricity in the UK by the year 2020.

The share of electricity produced from renewable energy in Germany has increased from 6.3 percent of the national total in 2000 to about 25 percent in the first half of 2012.

31 March 2011 – Spain’s central government objective for renewables to cover 40% of total electricity supply by 2020 is achieved in 2010. Red Electrica reported that in the first quarter of 2011, the renewable technologies covered 40.5 percent of the demand, a little less than in the same period in 2010 when it reached 44 percent.

In March 2011, 57.9% of Spain’s electricity was generated by technologies which do not emit CO2, and wind power energy was the technology with the largest production of electricity. Spain generated nearly 3 percent or 6.7 TWh of its electricity from solar energy, wind turbines generated 21 percent or 55 TWh, and hydroelectricity’s share was 17 percent or 44 TWh.

The new renewables of wind and solar in combination provided nearly 24 percent of supply. Together both new and conventional renewables delivered 40.5 percent of Spain’s electricity. Cogeneration (15 percent), natural gas CCGT (17 percent), coal (13 percent) and nuclear (19 percent) provided most of the rest.

Spain’s climate, geography, and population are similar to that of California. Spain’s 46 million inhabitants consume some 260 TWh per year. California’s 37 million people consume about 300 TWh per year. However, wind energy generates less than 6 TWh per year and solar less than 1 TWh per year in California. Together wind and solar provide only 2 percent of California’s electricity.

Alain Verbeke's picture
Alain Verbeke on Jun 16, 2013

” For some perspective, consider that you will need about 100 of those 50 MW solar plants to equal one standard coal plant commissioned roughly every two weeks in China.  “

And here is the result of that decade long policy :

June 16, 2013. The capital Beijing earlier this year saw levels of particulate matter in the air reach almost 40 times World Health Organization limits, as other cities in China were hit by high levels of pollution, provoking outrage nationwide.

Air pollution contributed to 1.2 million premature deaths and 25 million healthy years of life lost in China in 2010, the US-based Health Effects Institute reported in March, basing its figures on a global survey published in British medical journal The Lancet.


George Stevens's picture
George Stevens on Jun 19, 2013

Good point about the subsidies Brian, I was thinking the same thing. The $/kWH figure needs to be modified to include all kWhs that will be produced in the lifetime of the solar or wind plant. 

This article is about grid parity, which means that a price on carbon isn’t necessary. More importantly it is seemingly impossible for a society with very limited climatic understanding to put a price on carbon, especially considering the capitalist nature of virtually the entire globe. 

George Stevens's picture
George Stevens on Jun 19, 2013

Schalk, great article, but you should incorporate the correction that Brian suggested to avoid bias.

if solar PV received $X subsidies last year, then the $/kWh figure should account for all kWhs that the installed PV is projected to produce in its 20 year contract.

This is complicated by the fact that many PV plants will not meet projected generation figures, but you can state that afterwards. 

PV reliability will be an interesting factor going forward:

George Stevens's picture
George Stevens on Jun 19, 2013

Subsidy $/kWh produced is the only meaningful metric to use and on a $/kWh basis subsidy for wind and solar are much much higher than fossil fuels or nuclear. 

This is so commonly misunderstood it is almost comedic to see it mentioned in every discussion about wind or solar subsidy.

George Stevens's picture
George Stevens on Jun 19, 2013

Lockheed Martin has plans for an OTEC pilot plant. 

If any industry had its legs unjustifiably cut out from under it, it is nuclear. And despite this it is likely that nuclear fission willl play the most prominent role in displacing fossil fuels in the near future, with the aid of other renewables. 

Lewis Perelman's picture
Lewis Perelman on Jun 19, 2013

AV, those sources seem to include hydropower as “renewable.” The latter does not have the intermittency problems that solar and wind power do. And many “greens” do not consider hydropower to be ‘renewable.’ Indeed, in many places they oppose hydropower development and even seek to dismantle existing dams.

You keep skirting the backup/storage needs of solar and wind.

Jonathan Cole's picture
Jonathan Cole on Jun 20, 2013

While I applaud the effort to actually make sense of the problem, I think the analysis is too smug by comparison to the full facts. We should be encouraging solar electric storage systems that maximize self-consumption instead of dubious, subsidized and mandated energy injection to a grid which already loses up to 20% in transmission. This is actually a giveaway to the utility industry which avoids financing the generating equipment. The amount of power that a household of 2 needs to store to see them reliably through 99% of shortfalls (including night, clouds, winter/summer differentials) costs less than $20 a month of amortized battery costs. Having lived on solar energy with battery backup for thirty years, it has become clear that distributed solar with battery backup and using the grid as a last resort backup, yields affordable power at reasonable rates which are locked in for the life of the system. Even without subsidy, such a solar with battery backup system costs about the price of a late model used car but provides uninterruptrible power for 25-30 years. An important thing that you leave out is the fact that the total actual costs of fossil fuels (including destruction of the natural world, public health and the future of all life forms) are never included in calculations such as yours because if they were it would be absolutely clear that renewable energy is already cheaper than fossil fuels.

Lewis Perelman's picture
Lewis Perelman on Jun 21, 2013

Hmm. Nobody is going to use the grid except for backup. 

How is that going to be paid for?

Paul O's picture
Paul O on Jun 21, 2013

a v,

You keep launching a barrage of websites and still fail to address what the writer is saying. None of your websites address the question of intemittency, low capacity factors, and the need for storage without the need for which PV would have been absolutely drop dead the way to go (my opinion).

I would like to hear what you personally have to say about intermittency and storage.

Schalk Cloete's picture
Schalk Cloete on Jun 21, 2013

Thanks Jonathan. Yes, by a certain point, one needs to start encouraging energy storage in order to avoid serious problems related to the large unwanted peaks. However, this “encouraging” will ultimately have to be through additional subsidy, forcing everyone to pay for additional renewable energy infrastructure without adding any additional generating capacity (actually destroying some capacity as batteries lose about 10% of the energy cycled through them).

For example, Germany currently has a penetration rate of about 13% of intermittent renewables and uses (increasingly unwilling) trade with its neighbors to balance about half of that. They are now starting to subsidize storage, but this will not be possible on any meaningful scale because the high price of electricity is already a major political obstacle. 

Just a few points about household solar. Getting 99% of electricity from solar with battery backup will require the following: 1) living in a very sunny location with minimal cloudy spells and very well matching seasonal demand/supply ratio 2) a substantial over-capacity to ensure that electricity is almost always available and 3) a consumer willingness to adjust consumption rates to match production rates. These factors severely limit the applicability of this 99% theory and still requires significant payments to the utility to for the grid connection required by that last 1%. 

It might be hard to believe from this article, but I actually installed some home solar (water heater and PV) for my parents’ house in South Africa (I live in Norway where solar power makes no sense). I think the water heater is great and everyone should have one, but the PV remains uneconomical even in sunny South Africa. We paid about $4000/kW installed and save about $180/kW/year in electricity costs. Assuming no panel degradation and a 30 year lifetime, this will become uneconomical for any discount rate higher than 2%.  Also, this assumes net-metering where excess electricity is sold back to the grid at retail prices. 

Adding batteries to this system would double the costs, making the economics completely hopeless. And yes, while solar panels might still have some cost reduction in them, I don’t have too much hope for batteries. 

It is also useful to keep in mind that home electricity usage is only about 15% of total primary energy consumption per person. Solar panels on the roofs of half the houses in a neighborhood is therefore not going to be replacing much fossil fuels. 

Regarding the externality issue, it is important to realize that negative externalities per kWh are a function of the total installed capacity. My feeling is that, if we ever get intermittent renewables to supply just as much energy as fossil fuels, we will find that the negative externalities of renewables are now larger than those of fossil fuels. Some more details are given in a previous post

jan Freed's picture
jan Freed on Jul 27, 2013

1.  Such comparisons seem to ignore the externalities of coal..acording to a Harvard Medical School study ill effects of coal pollution are $300-$500 billion/year ($.18/kwh)

This is even before we consider AGW costs, which a Cambridge study tells us may top out at $60T (the GDP of the world, for one year).   Who do you love? Cambridge U. or “what’supwiththat”

Also, let us consider the $23 billion spent on carbon sequestration research; and as yet no commercial applications.  And estimates it may double the cost of coal energy.

2.  Any timid measures remind me of a lady on the Titanic as it sinks:  “Should I bring the mink stole or the ermine; does this vest make me look fat?”

3.  I have read (though I am no expert) that the intermittancy issue is a minor one, this from CEOs of utility companies.  The more wind/solar inputs the less the problem

Schalk Cloete's picture
Schalk Cloete on Jul 27, 2013

Thanks for the comment. Please consider the following counter-arguments:

1. I assume you are referring to Epstein et al. (2011). Well, when dealing with a discipline as inexact as energy externalities, quoting a single study does not hold much meaning. A previous post gave a median coal externality of about €0.04/kWh which should be more representative. 

BTW, the Epstein study does in fact include the effect of AGW at levels of $10, $30 and $100 per ton of CO2e. While I agree with the urgency of AGW mitigation, the aforementioned post also points out that the chances of the world effectively mitigating AGW with renewable energy is essentially 0%. 

CCS lacks the ideological appeal and the easy modular deployment of renewables and is therefore not being deployed. Deployment will only commence once a steady CO2 price is implemented. The literature concensus cost for first generation CCS is about $40/ton ($0.04/kWh). Second generation technology currently being demonstrated can halve this cost. 

2. I agree with your sense of urgency surrounding the sustainability crisis we face today. My argument is simply that the heavily subsidized deployment of first generation renewable energy technologies is doing more harm than good. 

3. I don’t know where you read that, but that is complete nonsense. More wind and solar inputs first demand more ramping and spinning reserve of fossil plants (leading to higher costs and less efficient fossil fuel combustion). Then, when you reach the stage where Germany is now, you need to start looking at short term storage which currently is totally uneconomical. And then, when slower seasonal and climate related variations become important, you need to start looking at long-term storage which I think is pretty much economically impossible.

Take a look at the daily German power supply curves here (slide 150 onwards) and imagine that you are the grid operator having to manage this situation. Also take into account that Germany currently gets only about 13% of its power from intermittent solar and wind and, when accounting for the increasingly unwilling trade that Germany uses to balance out most of the unwanted renewable power surges, one can estimate that intermittent renewables only supply about 6% of the power of Germany and its closest neighbours (less than 3% of total energy). 

Germany is now starting to subsidize storage which will only add to the costs without adding any additional capacity. When you consider that EEG charges have already doubled the wholesale electricity price for German consumers and that high electricity costs are now a highly politicized issue, the fact that these problems are already surfacing at a 3% share of wind and solar energy does not exactly inspire confidence. 

jan Freed's picture
jan Freed on Jul 27, 2013

You dismiss the Harvard study (up to $500 billion/year health effects) with a wave of your hand.  What, specifically, is lacking or misleading in that study?  If it were off even by a factor of 2, wind/solar would be a bargain. 

Schalk Cloete's picture
Schalk Cloete on Jul 27, 2013

As I said, determining energy externalities is an incredibly inexact (pseudo-) science. For that reason, you will find estimates all over the place, varying by an order of magnitude or more. Obviously, advocates of renewables will quote studies that are on the high end of the spectrum such as the Epstein study. As a researcher, I try to stay clear of such subjective bias. 

In addition, the lion’s share of the externality calculated in the Epstein study comes from poor air quality, primarily SO2. This is a problem in older coal plants, but modern plants contain scubbing equipment that remove the bulk of this problem. Obviously, solar and wind competes with new coal plants and not with old plants. 1200 GW of these new coal plants are currently being planned. For perspective, this is equivalent to about 100 times the total global solar PV capacity installed up to the end of 2011. 

My primary concern, however, is the fact that energy externalities are a strong function of the level of deployment. In other words, coal externalities are accentuated because it produces about a third of our energy while solar and wind produce 1.5%. If these roles were to be reversed, the externalities of solar and wind would suddenly appear to be much greater than that of coal. This point is made more clearly in the post linked in my comment above. 

Also, even if we work with the Epstein figures and price coal at $0.2/kWh, wind/solar are still far from being a bargain. Wind might look good until a penetration level of about 10%, but solar will remain uncompetitive even under the highly erroneous assumption that intermittent and non-dispatchable solar power can be valued similarly to steady and dispatchable coal power (check out the objective reality about energy prices here). And then of course there are still other alternatives like natural gas and nuclear…

jan Freed's picture
jan Freed on Jul 27, 2013

With the word “bias’ you think you can dismiss this study? It was peer-reviewed in a highly prestigious journal.  Any deficiencies in method or conclusions would be noted in the peer review.

It was described as

Epstein and eleven co-authors have complied a first of its kind “Full Cost Accounting for the Life Cycle of Coal”, tracking the multiple human health and environmental impacts of coal from mining to transport to combustion in coal power plants and the waste stream that results. The team used peer-reviewed studies already in the literature to assign costs to the various impacts. The study was published in Annals of the New York Academy of Sciences.

The study is here:

Table 1 summarizes a long list of environmental/health impacts.

The effects of S02 was minimal and not a major player as you described: (As far as acid precipitation is concerned they state, “No monetized values of costs were found”)

As far as 1200GW of planned new coal is concerned, if proper CCS was employed to deflect impacts of AGW, I say “a good start”!  Many other impacts would remain.  But then again, CCS would add significantly to the costs of electricity, far beyond that of wind, for example. 

Lewis Perelman's picture
Lewis Perelman on Jul 27, 2013

Excellent comments, Schalk.

As I have often pointed out, internalizing externalities is an exercise that works better in theory than in practice. There is always considerable subjectivity in deciding what externalities to include and which to exclude from the accounting, as well as how to determine their values in the absence of markets.

For example, are SO2 emissions a positive or negative externality? Some may note negative effects on health or acid rain. But SO2 also reflects sunlight, cooling the earth and countering the effect of AGW. Scrubbing SO2 out of emissions mitigates one problem while amplifying another.

Re Jan’s: “With the word “bias’ you think you can dismiss this study? It was peer-reviewed in a highly prestigious journal.  Any deficiencies in method or conclusions would be noted in the peer review.” This bespeaks a (too common) misunderstanding of how peer review actually works, and of its serious limitations and biases. See, for instance:

jan Freed's picture
jan Freed on Jul 28, 2013

No study, or opinion (yours or mine) or analysis of a study, is infallible.  Please read the study and point out its deficiencies and supply links of any study you think is more thorough and accurate. 

The Harvard study itimizes the manifold sources of trauma and is enough to make a grown man cry.]

But, now we have alternatives and I applaud them. 




Schalk Cloete's picture
Schalk Cloete on Jul 28, 2013

Thanks Lewis. Yes, I agree completely. 

Perhaps the most important practical effect of the great amount of subjectivity involved in the quantification of energy externalities is that it makes actual policy implementation all but impossible. The fossil fuel lobby can make a strong case for enormous positive externalities in the form of the economic development brought by cheap and simple fossil power while the renewable energy lobby can make a strong case for enormous negative externalities such as those mentioned in the Epstein study. Perpetual political gridlock is the only logical outcome of this kind of situation. 

I enjoyed the article about peer review. In my experience, the primary purpose of peer review is to prevent the rapid prolifiration of false and misleading information in the digital age we live in today. This is a very important function though and makes peer review very important despite its flaws. I watched this interesting documentary some time ago where the president of the Royal Society discussed the dangers of peer review being replaced by “peer-to-peer” review:

Schalk Cloete's picture
Schalk Cloete on Jul 28, 2013

I’m not trying to discredit the work of the authors of this study. I’m just saying that this is only one opinion in a highly subjective field of research. For example, the conclusions would change dramatically if one decided to 1) only look at the most modern coal-fired power plants, 2) include the positive externalities of coal in the form of economic and technological development and 3) compare the externalities of renewable energy and storage at 50% penetration into our energy systems. 

In addition, the actual monetized costs of things like human health and education is highly uncertain. As an example, the study states on page 86 that “…therefore implying 24,475 excess deaths in 2005, with a cost of $187.5 billion…”. Well, smoking kills close to 500000 Americans yearly. If the same cost per death is used to estimate the external cost of smoking, it would sum to $4 trillion which is 25% of US GDP. I know smoking is bad, but this sounds a bit excessive doesn’t it?

About the SO2, you looked at the acid rain effect of SO2 which is quite small. The primary effect of SO2 is that it is a precursor to toxic particulates which have a significant negative impact on human health. More information about this can be found on page 86 in the study. 

Lewis Perelman's picture
Lewis Perelman on Jul 28, 2013

Jan: “Please read the study and point out its deficiencies…”

I did. I found it here:

One notable deficiency is that it does not adequately address the question: Compared to what?

As the study indicated, coal production and use obviously imposes a number of serious, negative impacts. But the authors do not do anything approaching a complete, relative benefit/cost analysis of coal and potential alternatives. The only alternative they address is CCS, which most already recognize is not an adequately developed option.

Nothing in that study supports the claim that wind and solar would be better alternatives, or even feasible alternatives. The most practical current alternatives are hydropower and nuclear power, which have their own externalities that some factions find unacceptable. As Schalk accurately observes, the externalities game does not resolve political conflict.


jan Freed's picture
jan Freed on Jul 28, 2013

If my taxes are given to oil and coal (not mentioning the $300-$500 billion/year health effects) how does that make oil and coal “cheap”?  I paid to make them “cheap”?

Isn’t it simply a case of special interests calling the shots, and the Congressional “fossil tools” dressing in fig leaves?

jan Freed's picture
jan Freed on Jul 28, 2013

And for how many years has oil/nuclear been subsidized? And how many years has wind been subsidized?

And how many $$billions has the taxpayer spent on subsidized fracking R and D; CCS R and D? Nuke R and D?. Health effects of coal? AGW (each year’s delay = $600 billion)

I would bet comparison of totals of fossil/nuke vs. renewables on a $/kwh basis would be astonishing.



Lewis Perelman's picture
Lewis Perelman on Jul 29, 2013

Jan, renewable energy sources (e.g., solar, wind) receive a much higher level of subsidies per BTU produced than do fossil fuels. See the table in this:


Moreover, the fossil fuel industry can easily get along without subsidies but renewable energy ventures for the most part cannot survive without them.


Rob Flynn's picture
Rob Flynn on Jul 29, 2013

The academic project to adequately put a price on externalities is certainly commendable,

But stepping back from it a little its clear that real world price being put on externalities from fossil fuel is hugely inadequate.


Schalk Cloete's picture
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