PUC’s Computer Tool Exposes Renewable Energy Bloated Costs

REUTERS/Toby Melville

The Sierra Club is upset because the California Public Utilities Commission (PUC) built a sophisticated and unbiased computer model to analyze the cost-effectiveness of new solar policy proposals. But despite all the Sierra Club’s political clout, the computer model determined is that none of the solar policy proposals are cost effective.

After years of paying about a $200 premium to buy any and all excess electrical power streaming from home and commercial building rooftop solar panels, California is supposed to be moving to “market-based solutions” for energy production.

To facilitate a fair and transparent analysis of competitive energy strategies, the PUC commissioned San Francisco/Vancouver-based consultants Energy + Environmental Economics (E3) to build an integrated “computer tool” to provide a rigorous technical analysis and make the computer tool accessible for use by all stakeholders.

E3 was considered an ideal vendor because their reputation for the unbiased rigor of their analysis that has qualified the firm to serve as expert witnesses in regulatory proceedings and commercial litigation. E3 also publishes in extremely credible scholarly journals. Given that the competing “stakeholders in the solar policy debate include the public, not-for-profits, regulatory commissioners, elected officials, academia and corporate executives and the press, E3 was accepted as a near perfect PUC vendor.

Despite oil prices falling by 45 percent last year, to PUC pushed up California’s commercial and industrial electricity rates to 11.9 cents per kilo-watt hour, the highest in the continental U.S. The reason for higher electric rates is to comply with the state’s Renewables Portfolio Standard that requires municipal power companies to double their percentage of “renewable” electric power from 18 to 33% in the next five years.

Renewable energy sources are very “intermittent and often non-dispatchable,” due to variations in wind and sunlight. The “capacity factor” of direct costs of producing electricity from wind is 4.2 times and solar is 9 times more expensive than natural gas. But adding in the indirect “stand-by” costs for keeping available fossil fuel capacity drives the “combined cost” for wind to 12.3 times and solar to 33.8 times the cost of gas.

Given that for manufacturing energy costs average about 150 percent more than labor costs nationally, the PUC cannot further raise business rates without further causing the state to lose large numbers of manufacturing jobs. The heavy burden of the stalled-out manufacturing sector since 2010 helps explain why California’s 16.8 percent poverty rate is one of the highest in America.

Breitbart has been highlighting these costs for years, but the Sierra Club and their fellow crony capital friends that are making “big bucks” from installing and managing solar and wind power generation have successfully used the supposed “climate change” crisis as a smokescreen to avoid an honest debate about the costs of renewables.

This explains why the Sierra Club and their leftist allies are so upset that E3’s computer model is generating honest data regarding the full costs and negative economic impacts of wind and solar power generation versus natural gas power generation.

Alison Seel of the Sierra Club complained that, “We have this very complicated modeling exercise that is built into Excel and takes four-and-a-half hours to run.” But what she really wants is for the E3 model to be tweaked to  give greater consideration to the “societal benefits” from renewables, according to the San Diego Union Tribune.

Playing on the same theme, the solar industry is being careful not to directly attack the credibility of the E3 model. Instead, the industry describes the E3 tool as “complex, difficult to understand and time-consuming.” An industry attorney wrote, “We are skeptical that the public (computer) tool can serve as a fair analytic frame for analyzing the issues.”

California’s Renewables Portfolio Standard (RPS) is the most ambitious requirement on the planet. With Governor Brown’s stealth Presidential campaign in full swing, he just announced California’s renewable power generation will double in five years and triple to 50 percent of California’s Electric generation by 2030.

Having open access to E3’s honest and transparent data regarding the true costs of the RPS should be seen as a positive development for all Californians.


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