The German energy dystopia
Advocates of mandating wind and solar often talk about these electricity generators as if they will usher in a new utopia for us all. For a local example, look no…
Minnesota families saw their electricity bills reach a new all-time high in 2018 due to an increasing reliance on expensive and unreliable wind and solar power. Despite the fact that Minnesota is already on track to meet current renewable energy mandates, Xcel Energy wants exceed these regulations by building 3,000 to 4,000 megawatts (MW) of solar, a massive amount, and shutting down their existing coal plants, which produce some of the lowest cost electricity in the state.
It appears Xcel is enlisting the help of the Minnesota Center For Environmental Advocacy (MCEA) to help gain public approval for this plan by sponsoring the organization’s Legally Green Gala last week.
For those of you who may not be familiar with MCEA, they are a group that opposes environmentally responsible copper/nickel mining (they don’t seem to think it is possible to mine responsibly), and thinks farmers should have to account for their greenhouse gas emissions if they want to expand their operations, even though this will have zero measurable impact on future global temperatures.
MCEA also advocates for mandating more wind and solar on the grid, while at the same time opposing the construction of a natural gas power plant in Superior, Wisconsin, that would provide reliable electricity to Minnesota Power when the wind isn’t blowing or the sun isn’t shining.
This sponsorship is interesting because it demonstrates how utility companies and environmental groups have a symbiotic relationship, rather than an antagonistic one.
First of all, it is critical to understand that utility companies are not private companies. They are government-approved monopoly utilities that are guaranteed to make a profit. As a customer, you are forced to buy your electricity from the utility company in your area, and you’re not allowed to switch companies even if you think the prices are too high, or the service is inadequate.
As a result of being government-approved monopolies, utility companies aren’t allowed to make a profit on the electricity they sell. Instead, they are guaranteed to make a 7.5 to 10 percent profit when they spend money on new facilities, be they new wind turbines, natural gas plants, solar facilities, transmission lines, or even new corporate offices.
If utility companies don’t build anything new, they don’t get to raise their profits. Obviously, this compensation structure gives them a powerful incentive to spend as much money as possible on new infrastructure, whether it is needed or not.
Minnesota’s electricity demand has been flat since 2007, so there is no real need for any new power plants, regardless of whether they are coal, nuclear, wind, or solar. As you can imagine, utility companies don’t like these situations because it means there is no reason to build new infrastructure and raise their profits.
Enter wind, solar, and the unvirtuous cycle between the utility company and environmental groups.
Weather-dependent resources like wind and solar are a utility company’s dream because they require a massive build-out of wind turbines, solar panels, natural gas plants, and transmission lines thus enabling them to make huge profits on these expenditures.
The graphic below is from Xcel Energy’s Preferred Plan for resource planning, and it shows that shutting down all of its coal coal and building new wind, solar, energy efficiency, and natural gas would require the utility to build or displace 9,806 megawatts (MW) of new generating capacity, which is 59 percent of all the generating capacity that was online in Minnesota in 2017, according to data from the Energy Information Administration.
Such a build-out would likely cost tens of billions of dollars, after solar panels, wind turbines, new natural gas plants, and transmission lines are built. This translates into hundreds of millions of dollars in additional profits for the utility and higher electricity bills for Minnesota families and businesses.
Such a dramatic capital expenditure would not likely be approved by government regulators if not for the involvement of environmental groups, who lobby for more wind and solar on the grid. So, Xcel gives money to green groups, who in turn promote wind and solar. Building wind and solar pads the utility’s profits, which gives them more money to spend supporting green groups.
Thus, the utility company/green group money-go-round continues to raise prices for Minnesota families and businesses, who have no other option but to buy their electricity from the monopoly, while simultaneously enriching themselves.
This is why it is my sincere hope that reporters begin to understand that by getting a quote from an environmental group for their story, and then getting a quote from Xcel, they are not actually representing the opposing view, because these entities are actually on the same side. Fortunately for Minnesota families and businesses, our organization will continue to offer our evidence-based arguments for the most important energy issues facing our state.
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