Monday, June 05, 2017

Renewable Energy - Food Stamps for Millionaires

 With all the talk about how dead the coal industry is and how vibrant the renewable energy sector is, there is little talk about the government incentives for the renewable energy sector.  According to the US Energy Information Agency:

In 2016, about 4.08 trillion kilowatt hours (kWh) of electricity 1 were generated at utility-scale facilities in the United States.2  About 65% of this electricity generation was from fossil fuels (coal, natural gas, petroleum, and other gases), about 20% was from nuclear energy, and about 15% was from renewable energy sources. The U.S. Energy Information Administration (EIA) estimates that an additional 19 billion kWh (or about 0.02 trillion kWh) of electricity generation was from small-scale solar photovoltaic systems in 2016.3
Major energy sources and percent shares of U.S. electricity generation at utility-scale facilities in 20161
  • Natural gas = 33.8%
  • Coal = 30.4%
  • Nuclear = 19.7%
  • Renewables (total) = 14.9%
    • Hydropower = 6.5%
    • Wind = 5.6%
    • Biomass = 1.5%
    • Solar  = 0.9%
    • Geothermal = 0.4%
  • Petroleum = 0.6%
  • Other gases = 0.3%
  • Other nonrenewable sources = 0.3%
  • Pumped storage hydroelectricity = -0.2%4
The Washington Post reported that 2014 (the latest data available) Census data put the number of people employed in the coal industry at 76, 572.  A 2017 Department of Energy report puts the number at 160,119, with 86,035 working in electricity  generation, and another   74,084 working in other coal operations.  The table above shows that the coal industry produced 30.4% of all US electrical energy.  By these figures, each coal worker in the electrical sector produced about 0.0038% of all US electrical energy.  
For the renewable energy sector, the first thing that stands out is that highest percentage of renewable energy is produced by hydropower, a pre-industrial age technology, the water wheel.  The EIA says there is no good data on the number of people working on solar electric power, because the government does not have a good category for this job survey.  The EIA estimates that 260,077 people spend at least half of their time working on solar energy.  The largest percentage of workers in this sector are working on construction of new solar plants.  The EIA estimates that these workers produce 0.9% of US power; then, each solar worker produced about 0.00035% of US power, or about 1/100th as much as a coal worker.  Per worker, coal is 100 times more efficient than solar.  
If this is so, why would anyone invest and work in the solar industry?  Because of government incentives.  There is a 30% federal tax credit for individuals installing solar panels.  In addition almost every state offers additional incentives.  The Washington Post reported in connection with the failure of Solyndra solar company that the Obama administration had instituted an $80 billion clean technology program.  The Post article says:
The [Obama] administration, which excluded lobbyists from policymaking positions, gave easy access to venture capitalists with stakes in some of the companies backed by the administration, the records show. Many of those investors had given to Obama’s 2008 campaign. Some took jobs in the administration and helped manage the clean-energy program.   
These government incentives are no doubt responsible for much of the investment in the solar industry, rather than hard-nosed business decisions.  

Investment in wind energy is probably a more rational business decision than solar.  Wind energy produces 5.6% of US energy according to EIA.  It estimates that there are 101,738 workers in the wind energy sector.  By these figures, each wind energy worker produces about 0.0055% of US energy.  This indicates that coal workers are about six times more productive than wind workers.

Environmentalists who espouse renewable energy generally oppose nuclear energy.  I think this is wrong.  Nuclear energy has downsides, but does not contribute to global warming.  Chernobyl, Three Mile Island and Fukushima illustrate the dangers of nuclear energy, but the number of people killed or badly injured is not out of line with the people killed or injured by the fossil fuel industry, with its exploding wells, ocean platforms, pipelines, etc.  If wind power produced all US energy, we would probably have many people falling from windmills, hit by spinning blades, etc.  Unlike solar and wind, nuclear can produce large amounts of power needed by big cities and industry.  By hew EIA figures we have about 67,000 workers in the nuclear industry, which produces 19.7% of US energy.  This means that coal workers are about 1.3 times more efficient than nuclear workers in amount of power produced.  Of course there are huge costs involved in building new nuclear plants which are not included in these numbers.  

The main point of these numbers is to refute the statistics which say that the future of labor is in renewable energy, not coal or other traditional sources.  In fact, it looks like the solar industry is extraordinarily inefficient.  It’s as if solar workers are making labor intensive, expensive Swiss mechanical watches, while coal workers are making cheap but accurate digital watches for ordinary people.  Who pays for the expensive, hand-made solar energy?  Mainly the government.  At the moment that is the only reason it is financially feasible.  The government gives billions to rich investors for solar work, just like it gives billions in food stamps to poor people.  Both are well intentioned, but it may be too early to tell whether solar will be a practical as its champions claim.  

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