Doubling Down on Failure
How a 50 percent renewable energy mandate would cost Minnesota $80.2 billion.
If you thought Governor Walz’s proposed gas tax was going to be expensive, buckle up, because you ain’t seen nothing yet.
DFL lawmakers in St. Paul have introduced legislation that would require 50 percent of Minnesota’s electricity to come from renewable energy, primarily wind and solar, by 2030. Governor Walz, who called climate change an existential threat, is seeking to go even further, and has proposed mandating a 100 percent carbon-dioxide-free electric grid by 2050.
But a new study released by American Experiment demonstrates that these energy mandates would be all pain and no gain.
Many people believe that shifting away from fossil fuels to wind and solar power to generate electricity will be economically advantageous, relatively easy to achieve, and result in substantial environmental benefits. This belief could not be more wrong.
In fact, even the 50 percent mandate would force each Minnesota household to spend an additional $1,200 per year, every year through 2050. Furthermore, this mandate would fail to make a measurable dent in global greenhouse gas emissions, or future temperatures, despite its enormous cost.
Such a misunderstanding will have far-reaching, negative impacts on Minnesota families, schools, and our economy. Such a misguided mandate would harm industries that are crucial to our state, such as farming, manufacturing and mining, the most.
The Center’s study examines the cost and energy mix of Minnesota’s energy grid under a 50 percent renewable energy mandate, achieving 100 percent of our electricity from wind, solar, and batteries would be exponentially more expensive, if possible at all. Our study also details three alternative scenarios—a Short-Term Nuclear, Long-Term Nulcear, and Affordable Clean Energy (ACE)—that provide an alternative vision for Minnesota’s energy future.
Essentially, we created the nuclear and ACE scenarios because we believe complaining without proposing a solution is called whining. Each of the nuclear scenarios would dramatically reduce carbon dioxide emissions at a much smaller cost than wind and solar.
The 50 percent Renewable scenario includes, in addition to wind and solar, 23 percent of electricity from nuclear power, 17 percent from natural gas, and the remainder from hydroelectric and biomass. At a cost of $80.2 billion through 2050, this scenario is by far the most expensive.
The two nuclear scenarios could achieve the same reductions in carbon dioxide emissions for far less cost. The Short-Term Nuclear scenario, which phases out coal by 2030 in favor of nuclear power, would cost $58.2 billion by 2050. The LongTerm Nuclear scenario, which replaces coal-fired power plants with nuclear plants by 2050 (as the coal plants naturally reach their retirement ages) would cost an additional $27.7 billion through 2050, compared to current costs. The ACE scenario is based upon the proposed Affordable Clean Energy rule devised by the Trump administration as a replacement for President Obama’s Clean Power Plan. This scenario would require existing coal plants to make upgrades to emit less carbon dioxide, while still allowing them to continue operation. This plan would reduce costs by $7.5 billion compared to current costs, through 2050.
Aren’t wind and solar cheaper?
Think again. Would you be willing to go without electricity if the wind wasn’t blowing or the sun wasn’t shining? Probably not. So, it is important for people to understand that the grid is not a giant bathtub where electricity sloshes around until it is needed. Electricity must be delivered at the exact moment it is needed, and it cannot be stored economically.
Think of what happens to a fan when you unplug it from the wall. The need for supply to carefully meet demand at all times is why wind and solar cannot compete with nuclear, coal, or natural gas. Wind and solar can produce electricity only if the wind is blowing or the sun is shining. Wind turbines produce electricity around 40 percent of the time. In contrast, humans control when, and how much, electricity is generated by nuclear, coal, and natural gas plants.
These concepts may seem unrelated to cost, but they are the chief reason why wind and solar cannot currently reduce our electricity costs—and probably never will. None of us would be willing to go without electricity at night (when it isn’t sunny), and we wouldn’t roll the dice with wind during a polar vortex. We still need to have coal, natural gas, or nuclear power plants available to generate electricity, no matter how many wind turbines or solar panels we build. No matter how cheap wind and solar may someday get, they will still be an additional cost on the electric grid, and therefore, will still increase your electric bill.
It’s true that electric companies may save some money by burning less coal or natural gas to generate electricity, but these “savings” are overstated. Power plants have many fixed costs— such as the mortgage on the power plant, maintenance costs, paying for staff, insurance, and taxes—and these costs must be paid whether or not the power plants are generating electricity. Wind and solar can only offset certain costs of a power plant that burns fuel to generate electricity.
Think of it this way: Let’s say you decide to leave your car in the garage and ride your bike to work. You may be saving the cost of gasoline for your commute, but you still have to pay your car payment, interest on the loan, licensing, insurance, and maintenance. In this case, wind and solar still cost more per unit of electricity produced, and we still need enough dependable electricity sources to be available to generate 100 percent of our electricity.
In essence, wind and solar force Minnesotans to pay twice for electricity they can only use once.
What will it cost me?
To understand how Minnesota families would be impacted under each of these scenarios, it helps to understand what $1 billion is, more generally. Minnesota has 2.1 million households, so if we assume the cost of the government spending $1 billion is shared equally among these households, each will have to pay an additional household burden of $476. The same concept applies to electric bills.
At $80.2 billion, the Renewable scenario would cost each household around $37,000 through 2050, or roughly $1,200 per year. Switching to nuclear power to reduce CO2 emissions would still be expensive, but it would be far less expensive than relying on wind and solar. The total cost of the Short-Term Nuclear scenario would cost each household nearly $27,000 through 2050, or $867 per year. The Long-Term Nuclear scenario would cost each household $12,700, or $410 per year. Lastly, the ACE scenario would save each household approximately $3,500, or $112 per year.
The savings from the ACE scenario are not a world changer, but they are better than shelling out an extra $1,200 per year, every year, for 31 years. Minnesota households will experience this increase in the form of higher electric bills and higher prices for goods, services, and taxes, as other entities raise their prices to make up for higher electricity bills due to renewable energy mandates.
Electric bills: Prepare to pay more
Increasing Minnesota’s renewable energy mandate to 50 percent will cause electricity prices to rise by about 4.18 cents per kilowatt hour (kWh), or 40 percent compared to today’s prices. As a result, the average Minnesota household can expect to pay $375 more every year for electricity under the Renewable scenario. Bills would rise by $272.33 every year under the Short-Term Nuclear scenario, and $129.61 under the Long-Term Nuclear scenario. Each household would save $35.10 under the ACE scenario.
It’s not just families who will pay higher electricity prices due to wind and solar mandates. Schools will, too.
Impacts on education
Energy costs are the second largest expense incurred by schools throughout the country after the salaries of teachers, administrators, and support staff. As a result, high electricity prices represent a very real opportunity cost for school districts, forcing them to spend money on electric bills that should be spent on students.
For example, Edina Public Schools district uses 13.8 million kWh of electricity every year, according to Edina’s Electricity Action Plan. Increasing the price of electricity by 4.18 cents per kWh would result in increased electricity costs of approximately $576,400. Edina would have to lay off 10 teachers making $56,000 per year to pay these higher electric bills, or raise property taxes to keep them on staff. In contrast, the ACE scenario would save Edina schools nearly $54,000, allowing them to hire one additional teacher or offer other programs.
School districts in Greater Minnesota would be hurt even more, as they are already facing teacher shortages. Starting salaries for licensed teachers in some rural areas are as low as $31,000 per year, a key reason why rural districts are unable to compete for teachers with more affluent urban and suburban districts. One of the most effective means rural school districts have to address teacher shortages is to increase wages in an attempt to lure teachers, but rising electricity prices will limit their ability to do so.
There is a growing coalition of high school students lobbying for 100 percent renewable energy in Minnesota. Do you think they would still want this outcome if they were aware of the costs involved with their position?
But it will save the planet, right?
According to the U.S. Energy Information Administration, Minnesota currently emits 28.3 million metric tons (0.0283 gigatons) of carbon dioxide from power plants per year. This amount sounds like a lot, but according to the Global Carbon Budget, global emissions were 37.1 gigatons in 2018, which means Minnesota represented only 0.0007 of global carbon dioxide emissions. If we pursue the Renewable, Short-Term Nuclear, or Long-Term Nuclear scenarios, our share of global carbon dioxide emissions would fall by 0.0006.
The impact on future global temperatures would be equally small. Even under the climate models used by the Obama administration, which have been criticized for “running too hot,” future global temperatures will only be reduced by 0.0006 degrees C by 2100—an amount too small to be accurately measured with even the most sophisticated scientific equipment.
Interestingly, Governor Walz and DFL lawmakers have been mum on how much global warming their polices would avert. Given the massive costs for minuscule benefits, it’s not hard to imagine why. And because greenhouse gases mix evenly in the atmosphere, Minnesota would still incur all the greenhouse gas emissions from China, India, and other states and countries that give this issue scant attention. Given the enormous $1,200 per year cost, and immeasurably small benefits to the environment, most Minnesotans would probably prioritize that money for other expenditures.
Isn’t renewable energy creating a jobs boom?
Renewable energy advocates often tout “green” energy as a major engine of job creation, but using the economic modeling software IMPLAN, we calculated that 20,950 Minnesota jobs would be lost due to higher electricity prices in the Renewable scenario. The Short-Term Nuclear and Long-Term Nuclear scenarios would reduce employment by approximately 13,900 and 6,750 jobs, respectively, and lower electricity prices in the ACE scenario boosts employment, creating 1,500 jobs.
Furthermore, 82 percent of the jobs created by the wind and solar industry were temporary construction jobs in 2017. Rather than building a broad base of employment for a sustainable jobs future, renewable jobs disappear once the project is finished.
Aside from the temporary construction jobs created, increasing electricity prices will destroy more-permanent jobs in important Minnesota industries like mining.
Mining is an indispensable pillar of Minnesota’s economy. With annual average wages exceeding $80,000 per year, mining jobs are some of the best jobs in the entire state. They are especially critical for northeastern Minnesota, where average annual wages are approximately $42,000.
But because mining operations use enormous quantities of electricity, high electricity prices put these jobs at risk. The cost of electricity constitutes roughly 25 percent of the cost of iron ore produced in Minnesota. The cost of electricity for Minnesota’s iron mines has already increased more than 60 percent on average since 2007, when Minnesota enacted its 25 percent renewable energy mandate.
Iron ore mines and paper mills in northern Minnesota used 4.77 billion kWh of electricity in 2016, which was 8 percent of the electricity used in the entire state. This figure could reach 6.1 billion kWh if iron mines operate at a higher capacity.
By increasing electricity prices 4.18 cents per kWh, a 50 percent renewable energy mandate would increase the cost of electricity for the mining and paper mill industries between $199.2 million and $254.8 million every year. This increase is the equivalent of 2,490 to 3,185 high-paying mining jobs. Minnesota policymakers need to understand their actions are actively undermining industries crucial to our state’s economy and our nation’s security.
Under the ACE scenario, iron mines and paper mills would save between $18.6 million and $23.8 million, on average, every year through 2050 relative to 2016 prices. The gulf between the Renewable scenario and the ACE scenario is $217.9 million and $278.6 million, the equivalent of 2,723 to 3,482 mining jobs.
Renewable energy advocates often cite increasing demand for steel, copper, nickel, and cobalt as a reason why Minnesotans on the Iron Range should support more renewable energy mandates. There is no doubt that doubling the renewable energy mandate will increase Minnesota’s demand for these metals, but we won’t be able to afford to mine them here.
If DFL lawmakers are truly concerned about reducing CO2 emissions, they must lift Minnesota’s ban on new nuclear power plants, which has been in place since 1994. Otherwise, they are advocating for expensive and ineffective solutions to the issue they claim is an existential threat to “the children.”
I’ve noted several times on AmericanExperiment.org that wind speeds were too low to generate electricity during the polar vortex, and some wind turbines were shut down because it was too cold. Not only would nuclear power plants be essentially guaranteed to run in -24 degree weather, but our study also found that new nuclear power plants would achieve a lower emissions rate by 2030 and save Minnesota at least $22.3 billion through 2050.
Minnesota can show true leadership and provide reliable, affordable, and safe electricity by legalizing new nuclear power, not by doubling Minnesota’s reliance on intermittent “green” power (and natural gas).
Turns out, wind energy is not the answer.