Monday, June 20, 2011

8 Reasons Why Low Gas Prices Are Not Killing Green Energy

Why are low-gas-low-electricity prices closing old coal plants and stopping new nuclear power, while not stopping dead new renewable plants or closing existing ones here and around the world?

1. Once built wind, solar, and hydro plants are low-cost producers with much lower production or operating costs than coal, gas or even nuclear plants. Low-cost producers don't close once built. High cost producers like old, inefficient coal plants don't operate or close when gas drives down the price of electricity.

2. Only renewable power plants  can provide a 25 year fixed price for electricity, since fuel cost is zero and fixed and most costs are capital costs of construction.  Renewable energy plants are a major hedge against fluctuating fossil fuel prices.

3. Costs are declining sharply for solar and significantly for wind, making wind in some circumstances cost-competitive with gas.  Neither solar nor wind would be growing but for the large declines in costs.  Solar costs are continuing to decline toward $2 per watt installed.  By contrast, new nuclear costs are escalating.  Low-gas prices and the lower power prices have made it next to impossible to finance in USA the $10 billion or more capital costs for a new nuclear plant, unless Uncle Sam one way or another takes all risk.

4.  As once external, environmental costs like mercury, soot, smog, heat trapping pollution become internalized to the price of energy, the energy price signal signals that renewables are more and more economic.  The EPA proposed Air Toxic Rule is a powerful example of internalizing once external costs.
5. Fukushima and other energy shocks make renewables look good.  Germany, Japan, Switzerland are all examples of countries adopting much more renewable energy just as a result of the Fukushima energy shock.

6. Approxiamately 36 states have policies such as portolio standards that require increasing percentage of renewables plus the federal government has tax policies and other measures that support renewables.  These policies in combination provide a substantial pull for renewables.

7. Some renewable power systems like solar are ideally suited for on-site generation at homes and businesses, enabling owners to avoid or reduce distribution and transmission costs that coal, nuclear, and most gas plants incur.

8. Thee most important reason for renewables continuing growth is the enormous public support for them in the USA and most nations.  Polling puts the support for renewable energy typically at 80% or higher. This is the foundation on which renewable energy grows.

Renewable growth would be even stronger with higher natural gas prices, but the foregoing 8 reasons are why low gas prices are not killing Green Energy..

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