Key Takeaways
Subsidies are now powering almost 100 percent of new power capacity added in 2024, as wind, solar and batteries along with a small amount of nuclear made up nearly all the additions.
An analysis by Energy Point Research looked at a PV/battery backup system and found under favorable conditions that it would be very costly and a huge expense to consumers.
It will make electricity prices skyrocket as a PV/battery backup system is 2 to 4 times more expensive than natural gas or coal generation.
This is despite subsidies being so immense for renewable energy that Warren Buffett’s energy division collected $6.1 billion in taxpayer-funded tax credits from 2019 through 2022.
Subsidies are driving the rollout of intermittent solar and wind electricity requiring expensive backup while dismantling the full-time on-demand system Americans are accustomed to.
As more of these systems enter the grid, electricity prices will rise, even as taxpayers heavily subsidize the new system.
The Energy Information Administration (EIA) reports that during the first six months of 2024, developers and power plant operators increased the United States’ utility-scale electric generating capacity by 20.2 gigawatts, marking a 21 percent rise. This expansion primarily involved solar, wind, and nuclear energy sources, along with 4.2 gigawatts of battery storage. The addition of battery storage is intended to harness surplus wind and solar energy beyond current demand and to release this energy when wind and solar sources are not active. Looking ahead, developers and operators anticipate introducing an additional 42.6 gigawatts of capacity in the latter half of the year, predominantly from solar, wind, and battery storage, as per EIA forecasts. Should these projections prove true, nearly 97 percent of the new capacity will be driven by wind and solar power—fitting the environmentally friendly agenda of the Biden-Harris administration. Although nuclear power is also deemed “clean,” only unit 4 of the Vogtle plant in Georgia has become operational this year. This unit has faced cost overruns and significant delays, largely due to complex regulatory challenges imposed by the Nuclear Regulatory Commission.
The Biden-Harris administration promotes the idea that wind and solar power are cost-effective because they don’t require fuel—there’s no charge for sunlight or wind, unlike coal and natural gas, which rely on paid fuel sources. However, wind and solar energy have a major drawback: they can’t provide a constant supply since the sun doesn’t shine and the wind doesn’t blow continuously. This intermittency necessitates backup power from coal, natural gas, or nuclear plants that can operate around the clock, or the use of costly batteries to store and release excess energy generated when conditions are optimal. Analysts often overlook the expenses associated with this backup power and the high costs of storage batteries when assessing the price of wind and solar energy.
Energy Point Research analyzed a hypothetical grid solely powered by utility-scale solar energy and batteries (a PV-hybrid system). They modeled an idealized scenario with 12 hours of daylight and 12 hours of nighttime, assuming perfect conditions: constant demand of 100 gigawatts during the day and 50 gigawatts at night, with no clouds and optimal sunlight. Despite these favorable assumptions, the real-world breakeven cost for such a PV-hybrid system was calculated to be nearly $130 per megawatt-hour. With that cost, even after the favorable assumptions used, they find that claims that solar power is the ‘cheapest’ form of power very likely to be false for coal and gas-fired generation could serve this same grid at anywhere from half to a quarter of the calculated breakeven for a PV-hybrid system.
Currently, the U.S. grid relies on coal, natural gas, and nuclear power to support wind and solar energy. Consequently, the costs of battery hybrid systems haven’t significantly impacted U.S. consumers yet, though electricity rates are rising. The decline in the utilization of coal and natural gas plants has led to increased costs because these plants can’t spread their expenses over as much electricity production. In 2023, coal plants operated at only 42.1 percent capacity and natural gas combined cycle plants at 58.8 percent, compared to their design capacity factors of 80 to 85 percent. Residential electricity prices have surged nearly 20 percent since the Biden-Harris administration began, partly due to increased wind and solar capacity and the corresponding reduction in coal and gas generation.
Solar and wind power have long benefited from federal subsidies, including investment and production tax credits. These subsidies were recently extended by the Inflation Reduction Act, which was passed solely by Democrats with Vice President Kamala Harris casting the deciding vote in the Senate. As Warren Buffett said, “For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.” Such tax credits are a major incentive for companies to invest in these technologies, allowing them to lower their tax burdens. For instance, Warren Buffett’s energy division reportedly received $6.1 billion in federal tax payments from 2019 to 2022. Without these subsidies, the costs of wind and solar power would be even higher, potentially leading to even steeper electricity prices.
Conclusion
Wind and solar power are not a panacea and they are not cost effective despite what the Biden-Harris administration claims. When the cost of back-up power is included, which eventually would be supplied entirely by expensive batteries as the Biden-Harris goals for clean energy are being met, electricity prices will skyrocket for the cost of a solar PV-battery hybrid system is 2 to 4 times that of a coal or gas plant. Household electricity prices have already increased almost 20 percent since the Biden-Harris administration took office as subsidies and state mandates force solar and wind on the grid and force gas and coal generators to operate less or retire.
