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New Great Plains Institute Study Hides the High Cost of Reducing CO2 Emissions

Advocates of reducing CO2 emissions from electricity generation have released a new study attempting to show the necessary steps to make 13 states CO2-free in the Midwest.

Unfortunately, the study, released by the Great Plains Institute, failed to mention the massive cost of doing so.

Renewable energy advocates like to pretend wind energy is the lowest-cost source of electricity. Yet, for Minnesotans, electric bills have increased 26 percent faster than the national average as we have added more wind and solar to the grid.

According to the study, renewables would have to increase their energy share dramatically. Renewables currently provide 11 percent of the electricity generated in these states. They would increase to as much as 60 percent by 2050.

Interestingly, the costs to achieve this are hardly covered in the study. What little cost information it does include is not straightforward and non-comprehensive. It also relies on deeply flawed reports like the Lazard LCOE study.

Renewable energy advocates often use Lazard’s Levelized Cost of Energy (LCOE) study to support claims that wind energy is the cheapest source available. The study gives wind energy a range from $30 to $60 per MW of energy. They compare this to a range of $42 to $78 for combined cycle gas and $60 to $143 for coal.

However, anyone willing to actually read the fine print of this report will see why these numbers are virtually meaningless.

Lazard mentions several factors that are not included in their cost analysis for wind power, including:

  1. Network upgrades, transmission additions, and congestion costs. These costs would all increase with wind and solar energy sources and the numbers are enormous. In fact, Minnesota has spent nearly $4 billion on transmission lines needed for wind power, alone.
  2. The capacity value of generation sources. Energy Information Administration defines capacity value as “the contribution of a power plant to reliably meet demand.” Wind energy sits below 20 percent.
  3. Stranded costs that ratepayers must still pay for. This includes capital costs on retired coal plants, which states are increasingly doing to make-way for renewables.
  4. Other “integrated-related costs,” such as load-balancing, necessary back-up sources, and other ancillary costs.

In other words, the Lazard study shows you what it would take for wind turbines to be built without actually being able to provide power to consumers.

This allows wind energy to take-on the perception of being the lowest available energy source, when it’s not.

Why would Great Plains Institute use such a highly flawed study? If their intent is “to inform better public policy,” as their report suggests, then correct assumptions need to be made about the cost of these policies. The Lazard study, unfortunately, does nothing to further informed decisions about energy policies – and neither do the reports that use it such as GPI’s.

Mitchell Rolling (marolling20@gmail.com) is an intern at Center of the American Experiment.

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