Real costs: Why solar and wind energy are not market winners yet

Despite us constantly being told that solar and wind are now the cheapest forms of electricity, governments around the world needed to spend $1.8 trillion on green transitions last year. “Wind and solar are already significantly cheaper than coal and oil” is how US President Joe Biden conveniently justifies spending hundreds of billions of dollars on green subsidies. Indeed, arguing that wind and solar is the cheapest is a meme employed by green lobbyists, activists and politicians globally. Unfortunately, as that $1.8 trillion price-tag shows, the claim is deceptive.

Wind and solar energy only produce power when the sun is shining or wind is blowing. All the rest of the time, backup systems are needed, which makes their electricity enormously expensive. This is why global electricity remains almost two-thirds reliant on fossil fuels—and why we, on current trends, are an entire century away from eliminating fossil fuels from the generation of electricity.

The intermittency of green energy takes the ‘cheapest electricity’ claim apart. Modern societies need power 24/7, so unreliable and intermittent solar and wind sources entail large and often hidden costs. This is a smaller problem for wealthy countries that have already built fossil-fuelled power plants and can simply use more of them as backup. It will, however, make electricity more expensive, as intermittent renewables make everything else intermittent too.

In countries that are poor and electricity-starved, there is little fossil-fuel energy infrastructure to begin with. Hypocritical wealthy countries refuse to fund sorely needed fossil fuel energy in the developing world. Instead, they insist that people cope with unreliable green energy supplies that can’t power water pumps or agricultural machinery to lift populations out of poverty.

It is often reported that large, emerging industrial powers like China, India, Indonesia and Bangladesh are getting more power from solar and wind. But these countries get much more additional power from coal. Last year, China got more additional power from coal than it did from solar and wind. India got three times as much, whereas Bangladesh got 13 times more coal electricity than it did from green energy sources, and Indonesia an astonishing 90 times more. If solar and wind energy really were cheaper, why would these countries miss out? Because reliability matters.

The typical way to measure the cost of solar simply ignores its unreliability and tells us the price of solar energy when the sun is shining. The same is true of wind energy. This approach does make their cost slightly lower than any other electricity source. The US Energy Information Administration puts solar at 3.6 cents per kWh, just ahead of natural gas at 3.8 cents. But if you reasonably include the cost of reliability, the real cost explodes. One peer-reviewed study shows an increase of 11-42 times, making solar by far the most expensive source of power, followed by wind.

The enormous additional cost comes from the need for storage. Electricity is required even when the sun is not shining and wind is not blowing. Yet our battery capacity is woefully inadequate. Research shows that every winter, when solar contributes very little, Germany has a ‘wind drought’ of five days when wind turbines also deliver almost nothing. That suggests batteries will be needed for a minimum of 120 hours—although the actual need will be much longer, since droughts sometimes last much longer and recur before storage can be filled. A new study of the US scenario shows that to achieve 100% solar or wind electricity with sufficient backup, the US would need to be able to store almost three months’ worth of annual electricity. It currently has 7 minutes of battery storage.

Just to pay for the batteries would cost the US five times its current GDP. And it would have to purchase new batteries when they expire after about 15 years. Globally, the cost of power-storage adequacy would run to 10 times the world’s GDP, with a gigantic new bill every 15 years.

The second reason the ‘cheapest’ claim is false is that it leaves out the cost of recycling spent wind turbine blades and exhausted solar panels. Already, a small town in Texas, US, is overflowing with thousands of enormous blades that cannot be recycled. In poor countries across Africa, solar panels and their batteries are being dumped, leaking toxic chemicals into the soil and water supplies. Because of life spans lasting just a few decades, and pressure from the climate lobby for a rapid ramp-up of renewables, this will only get much worse. Another recent study shows that this trash cost alone doubles the true cost of solar power.

If solar and wind energy really were cheaper, they would replace fossil fuels without the need for a grand push from politicians and the clean-tech industry. The low-cost claim is incessantly repeated because it is convenient. If we want to address climate change, we must instead invest a lot more in low-carbon₂energy research and development. Only a significant R&D boost can bring about the technological breakthroughs needed—in reducing trash and improving battery storage and efficiency, but also in other technologies like modular nuclear power—to ensure that clean energy is truly cheaper than energy from fossil fuels. Until then, claims that fossil fuels have been outcompeted are just wishful thinking.