In yesterday’s post, I gave a rough estimate that it would take an increase in the price of fossil-fuel-derived energy of at least a multiple of three to five to achieve the kind of usage reductions that climate crusaders are seeking.  (And of course in the process the poor would get priced out of air conditioning, not to mention air travel and lots of other things.) Today I find a report of some real world experience indicating that actual price increases could be far higher than that. 

Paul Homewood is a British guy with a blog called Not a Lot of People Know That (notalotofpeopleknowthat.wordpress.com) that chronicles various sorts of climate craziness.  I recommend the blog to you.  A few days ago Homewood had a post titled “One small island’s dream of energy self-sufficiency.” The post comments on an enthusiastic story from the Korean news site Hankyoreh, reporting on the efforts of the people on the very small (0.85 sq.km.) Korean island of Gapa to make their energy sources 100% renewable.  The Hankyoreh article quotes glowing reviews of the project from some of the island’s residents.  Homewood then drily comments that he thinks he has spotted “one tiny little problem that our Korean friends seem to have overlooked.” In other words, looked at with a touch of realism, the project is an unmitigated disaster.  The problem is cost.  See whether you agree with the residents or with Homewood.

Gapa has a total of 178 residents in 97 families.  According to Hankyoreh, it has average daily electricity usage of 142 kW, and maximum peak usage of 230 kW.  To supply that demand with “renewables,” the Gapans acquired for themselves two big wind turbines, each with a rated capacity of 250 kW, plus they installed solar panels on 49 of the 97 homes, with a total rated capacity of 174 kW.  That would be a total capacity of 674 kW, against maximum peak usage of 230 kW, so nearly triple the peak demand and well over four times the average demand.  And finally, the Gapans were fully aware that wind and solar don’t work all the time, so they also got themselves a gigantic battery with a capacity to store 3.86 MWh of electricity, which should theoretically be enough to go more than a full 24 hours at their usage level with the wind and solar not functioning. (The battery pack of a Tesla Model S supposedly has a capacity of 85 KWh, meaning that Gapa’s battery is equivalent in storage capacity to about 35 Teslas.)

So with all that the Gapans should have way more than sufficient capacity to supply all their electricity needs with just the renewables—right?  Actually, not even close.  According to Hankyoreh, in the most recent measuring period of April 23 to July 12, the renewable resources supplied just 42% of Gapa’s power—32% from the wind, and 10% from the solar.  And where did they get the rest?  From backup diesel generators, of course!

Between Apr. 23 and July 12 of this year, Gapa Island had a cumulative energy self-sufficiency rate of 42%. The island is meeting 32% of its energy needs from wind power and 10% from solar power. The rate climbed above 50% in May, but fell again in the monsoon season. The other 58% of energy is still supplied by diesel generators.

Oh, and the renewables-based electricity system, even with the diesel backup, only produced enough power to supply just four (!) electric cars.  So it seems that the large majority of the Gapans must also continue to drive gasoline-powered vehicles.  That means that the renewable contribution to Gapa’s total energy usage is likely to be less than 20%. 

Now, can we please get an idea how much has been spent to get the Gapans all the way up to generating 42% of their electricity (and perhaps 20% of their total energy usage) from renewables.  Hankyoreh has the figures:

A total of 14.3 billion won (US$12.49 million) was invested in the project. Two 250kW wind turbines were installed, along with 174kW solar panels in 49 locations. Other installations included an energy storage device, a system control center, power conversion equipment and remotely controlled power meters.

That’s $12.49 million for 97 households—$128,000 per household.  Homewood points out that, assuming a 15 year useful life for the system and zero return on the invested capital, that would mean $8000 per year per household, or about $670 per month per household.  (By contrast, 2014 data from the U.S. EIA here show average monthly household electricity bills in the continental U.S. ranging from a low of $84 in Maine to a high of $145 in Alabama.) But wait a minute: add a 4% rate of return on invested capital, and the cost per household goes up to more like $13,000 per year, or close to $1100 per month.  That’s close to ten times what the average American currently pays for electricity—and this is to get up to maybe 20% or so of energy usage from renewables!

So how do the Gapans feel about their wildly expensive energy system? 

“At first, we weren’t satisfied with the results of renewable energy. Now, though, it’s benefiting us in two ways: our electricity bills are lower and the number of tourists is higher,” said Jin Myeong-hwan, the 55-year-old mayor of Gapa Island.

“Our electricity bills are lower”?  How did that happen?  Oh, it seems that this whole wildly expensive renewable system was supplied to Gapa Island gratis by the utility company.  As Homewood puts it:

It is little wonder the islanders’ electricity bills have come down, because the capital cost of the project has been paid for by Santa Claus. 

I would have said the tooth fairy, rather than Santa Claus, but whatever.

So what exactly is the climate crusader’s vision of how the United States is going to get up to say 50% of total energy usage from renewables?  If getting to 20% requires multiplying average utility bills by around 10, will getting to 50% require multiplying average bills by 20, or maybe 30?  I’ve never seen one of these people even remotely attempt to present honest numbers.  If any reader is aware of any such presentation, I would be glad to look at it. 

See Part II here.

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Report estimates losses if US adopts ‘keep-it-in-the-ground’ policy
By Nick Snow, OGJ Washington Editor

It would cost the US an estimated $11.3 billion/year of royalties, 380,000 jobs, and $70 billion/year of gross domestic product if proposals to stop oil, natural gas, and coal extraction from federal lands and offshore water were adopted, the US Chamber of Commerce’s Institute for 21st Century Energy said in a recent report.

Twenty-five percent of US oil, gas, and coal production would be halted under such policies that have been advanced by a number of environmental organizations, the institute said.

“American voters deserve to understand the real-world impacts of the proposals that candidates and their allies make,” said Karen A. Harbert, the Energy Institute’s president as the organization released the first report in its Energy Accountability Series on Aug. 24.

“In an effort to appeal to the ‘keep-it-in-the-ground’ movement, a number of prominent politicians have proposed ending energy production on federal lands, onshore and off,” Harbert said. “Their proposals will have a direct, harmful effect on the American economy, and in particular decimate several states that rely heavily on revenues from federal land production. Given the implications, these policy proposals should not be taken lightly.”

Certain states and regions would be disproportionately affected by a cessation on federal-lands energy development, the report noted. For instance, Wyoming would lose $900 million in annual royalty collections, which represents 20% of the state’s annual expenditures. New Mexico could lose $500 million, 8% of its total General Fund revenues. Colorado would lose 50,000 jobs, while the Gulf states - Texas, Louisiana, Mississippi, and Alabama - would lose 110,000, it said.

“Since 2010, the share of energy production on federal lands has dipped because of increasing regulatory hurdles from the Obama administration,” Harbert said. “Nevertheless, production on federal lands and waters still accounts for a quarter of all oil, gas, and coal produced. If that were to end, it would hit western and Gulf Coast states particularly hard, and could result in production moving overseas, which would harm our national security and affect prices.”

Two scenarios presented

The report provides two scenarios. The first examines the economic output that would be lost or placed at risk if energy development was immediately stopped on all federal acreage. The second analyzes the cumulative impacts of immediately ceasing new leasing while leaving existing leases in place.

While the aforementioned figures apply to the first scenario, the second also has major impacts, with $6 billion in lost revenues over the next 15 years, and nearly 270,000 jobs lost, the Energy Institute said.

The report uses publically available data on jobs, royalties, and production levels and the IMPLAN macroeconomic model. A technical appendix explains the methodology and sources of data.

The Energy Institute said that the report is the first in a series that will attempt “to better understand (and quantify where possible) the real world, economy-wide consequences of living in a world in which candidates’ rhetoric on critical energy issues were to become reality.
“Too often, there is a temptation to dismiss statements made by candidates as things said “off the cuff, or in the ‘heat of the moment,’ or offered up merely to ‘appeal to their base.’ This is incredibly cynical, and it needs to change,” it said. “A candidate’s views and the things he or she says and does to win the support of interest groups have a real impact on how policy is shaped, and ultimately implemented.

“That is especially true on energy issues today, as groups continue to advance a ‘Keep It In the Ground’ agenda that, if adopted, would force our country to surrender the enormous domestic benefits and clear, global competitive advantages that increased energy development here at home have made possible,” the Energy Institute said. “Accordingly, candidates and public opinion leaders should be taken at their word, and this series will evaluate what those words mean.”