New Analysis Suggests Obama’s Power Plant Regulations Will Almost Quadruple US Power Costs

Updated August 12, 2015 to add new sources

On August 3, President Obama announced EPA’s final “Clean Power Plan” (CPP) regulations (summarized by the Administration here). The regulations are even more absurd than the 2014 draft regulations in part because they raise the percentage of power generation capacity from “renewables” from 22 to 28%. This may seem to be a minor detail, but it is far from it.

As discussed in my in my new book, Environmentalism Gone Mad (available from the book website), the Climate Industrial Complex or CIC has long used many falsehoods and untrue assumptions in trying to sell their climate fantasy. One important one is that electric power produced by non-hydro “renewables” is the equivalent of that produced by fossil fuels. Another is that substituting “renewable” energy for fossil fuel energy will save consumers money.

But both are false in any meaningful sense and can easily be shown to be. If they were true, the current electrical generation system would long since have voluntarily adopted non-hydro “renewables.” Instead, EPA is being used by the Obama Administration to coerce states and utilities to adopt higher cost, less useful, and less reliable “renewable” power sources.

One of the reasons why non-hydro “renewables” are vastly more expensive per kilowatt hour is that they can only generate when the wind blows or the sun shines, not when people need electric power. Since electricity must be generated when it is used, “renewable” electrical energy is inherently less valuable. Adding “renewables” to the current electric grid infrastructure also means that it must be rebuilt at huge cost since new large scale “renewables” must be placed where the sun and wind are, which is not where the users are usually located. Non-hydro “renewable” electrical energy is also more expensive to produce from a system viewpoint than most fossil fuel energy; non-hydro “renewable” sources have a much shorter useful life and operate for much less of each year at much less of their rated capacity. A better understanding of why the real costs of non-hydro “renewable” energy is so high can be obtained from a simple example here. Unfortunately, many of these added costs of non-hydro “renewables” are difficult to estimate from engineering studies, which leads to widespread underestimation of them.

The reduction in emissions of carbon dioxide per new unit of non-hydro “renewable” capacity falls off rapidly as additional “renewable” capacity is added to an electric grid because additional fossil fuel sources must be kept in “spinning reserve” in case the wind dies or the sun goes under a cloud unless hydro is available. In other words, where hydro is not readily available, two sources, the non-hydro renewable source and the original fossil fuel source must be built, maintained, and operated rather than only one (the original fossil fuel/hydro source). This is very expensive and becomes ever more expensive as the renewable capacity is increased.

The Obama Administration actually claims that the CPP will save consumers money. This is apparently because of provisions in the new regulation that “reward” states that increase energy efficiency. A recent study of past energy efficiency weatherization efforts concludes that their costs exceed their benefits. Whether these costs are paid by homeowners or utilities or government, this means there have been no net savings from the past efforts studied, only costs. In other words, if the weatherization efforts are similar to those that states may now propose under the CPP regulations, the Obama claims concerning reduced consumer costs are nonsense unless someone else pays the costs, which means higher costs for either other ratepayers or taxpayers. In addition, the CPP will have a devastating impact on the less wealthy and anyone dependent on industries that can move production outside the US to obtain lower cost electricity.

Western European Electricity Cost Variations Largely Dependent on Installed “Renewable” Capacity

A new interesting but informal analysis suggests just how great the cost impact of the CPP will actually be. It concludes that the CPP will actually raise electricity prices much more than even CPP opponents have claimed. It shows that “renewable” capacity per capita explains 84 percent of electricity cost variations between countries in Western Europe. Adding the US to this new analysis shows that the CPP will almost quadruple US prices by 2030 if the CPP is fully implemented as EPA now requires. In addition, it should be remembered that electric power will become far less reliable, which is crucial for modern society.

Other studies (such as here and here) also show increasing costs and reduced reliability as “renewable” sources of power are added, although with differing and less empirically based estimates. The new estimate appears likely to be far more accurate since it is based on actual experience in Western Europe where similar efforts have been pursued for a number of years and rates have increased rapidly where there has been extensive use of non-hydro “renewables,” and includes all the hidden costs such as rebuilding the electric grid that are so difficult to model using engineering studies.

Because of the extreme nature of the CPP’s renewable requirements, it is necessary to extrapolate beyond current European experience that involves much smaller percentages. The new analysis assumes a linear extrapolation. In my view this is conservative because the problems posed by large scale use of “renewables” increase rapidly as the percentage of non-hydro “renewable” capacity rises.

Major Impacts on Americans

So if your electric bill is now $100 per month, the new CPP requirement would increase your monthly costs to over $350 by 2030 in current dollars according to the new analysis. If you are a senior citizen trying to live on social security, this may be catastrophic since it may make it necessary to choose between food and electricity, as has already been reported in the case of some of the more vulnerable residents of the UK. And if a company is still manufacturing its products in the US (increasingly uncommon), it will have even greater incentives to move production (and the jobs they support) to China or other countries which are not so foolish as to raise such a basic cost of production as electric power.

Much of this is explained in more detail in my new book, Environmentalism Gone Mad, which also explains why the supposed benefits of increasing the use of “renewables” are invalid, imaginary, or at best too small to be measurable. The CPP should be renamed the Costly Policy Plan because of its crushing costs and no, or at least no measurable, benefits. Until Americans understand this and make known their objections to the electricity price increases to their elected representatives, they will be vulnerable to the CIC’s falsehoods and untrue assumptions concerning the supposed need for and advantages of a major expansion of “renewable” sources of electricity. Many Western European countries are cutting back on such “renewables” because of popular opposition to the increased costs and financial problems caused by large public subsidies for “renewables.”

Obviously the Obama Administration has learned nothing from the disastrous Western European experience since they want to not only copy it but to go far beyond what the Europeans have so far actually done. It would be much better to abandon such a foolhardy effort before we go any further down that road. I am sure that the radical environmentalists view the current CPP as only the first step towards their fantasy “renewable” society with astronomical prices for electric power, regardless of the consequences for the rest of us, particularly the less wealthy among us.