No. of Recommendations: 22
Makes one wonder what the economics are without government subsidies? Buffett has stated before that he wouldn't invest in solar without the subsidies. How might changes in wind subsidies impact timing?
Like everything, it depends. But generally new unsubsidized wind is cheaper than new nuclear and coal, but more expensive than new natural gas. Because wind energy isn't dispatchable, sometimes it makes more sense to look at the cost of the energy it displaces.
There is another external cost to consider too: economic security. Our entire economy is based on fossil fuel energy. Sure, there is a bit of nuclear and a tad of hydro and others, but fossil fuel energy is the choo-choo that pulls the whole economic train. The problem is that oil is a fungible commodity. A disruption anywhere causes prices to spike everywhere. I asked Perplexity "Since WWII how many recessions were caused or preceded by oil shocks?" It answered:
Since World War II, almost all U.S. recessions have been caused or preceded by oil shocks, with only one exception. Ten out of eleven postwar recessions were preceded by a sharp increase in oil prices—a phenomenon often referred to as an oil shock.
Of these, six major recessions were caused directly by oil shocks which resulted in a contraction of between 1.7% and 4.3% of GDP. Our reliance on cheap oil has enormous secondary costs. Most US planners understand this. That's why our military has been parked in the Middle East for decades and we cut deals with unsavory characters like the Shah of Iran and Saddam Hussein. The US and Saudi Arabia have a security arrangement. We protect them, they pump oil. Try to guess which US president who that deal. The answer is Franklin Roosevelt. The US didn't need the oil. But FDR wanted the Saudis to pump oil to support the world economy, which in turn means our economy. Even back then it was clear. We cannot afford a disruption in the flow of oil.
But we getting to the point--not quite there, but getting there--where we have some options. We're on a trajectory where we could greatly decarbonize the transportation industry, electrical generation, building heating, and so on over the next few decades. The more we do this, the more we insulate ourselves from oil shocks. Losing 1% of GDP to an oil shock today would translate to about $230 billion of lost economic value.
Canceling wind and solar projects is a mistake. The Revolution Wind project mentioned above was about 80% complete and already connected to the grid. Canceling it was a non-sensical waste of money. Everyone agrees that US will need significant new generation capacity in the future. These policies blocking new generation seem very foolish and short sighted for a host of reasons. One country who sees these issues very clearly is China, who is building renewables at an astonishing rate. By 2030 about half of electricity in China will be from renewable sources.
