by ALEX EPSTEIN
Myth: Solar and wind are cheaper than fossil fuels
Truth: Solar and wind are only cheaper than fossil fuels in at most a small fraction of situations. For the overwhelming majority of the world’s energy needs, solar and wind are either completely unable to replace fossil fuels or far more expensive.
- We incessantly hear claims that solar and wind are cheaper than fossil fuels:
The World Economic Forum characterizes “renewables” as “the world’s cheapest source of energy”
“Renewables: Cheapest form of power” says the UN.
All such claims involve a dangerous fallacy I call “false generalization.”
Why we should be suspicious of the pervasive claim that “solar and wind are cheaper than fossil fuels”
- Observe that “solar and wind are cheaper than fossil fuels” is usually invoked, not to encourage competition but to justify coercive government policies to punish fossil fuel use and favor solar and wind.
- Observe that the same people claiming “solar and wind are cheaper than fossil fuels” moved heaven and earth to demand at minimum hundreds of billions of dollars in subsidies under the “Inflation Reduction Act” for these supposedly “cheaper forms of energy.”
- On its face, justifying favoritism toward solar and wind by invoking their cheapness is highly suspicious. If they’re cheaper, why do they need coercive policies to throttle their fossil-fueled competitors (e.g., opposing fossil fuel investment, production, and pipelines) and reward solar and wind?
- If a company has a TV set that’s as good as others, but cheaper, they win by selling their cheaper TVs on the market.
They don’t ask government to ban other TVs, to mandate their TV, or to give them hundreds of billions of dollars.
Truly cheaper products don’t need preferences.
- The simple reason that advocates of solar and wind who claim they are cheaper than fossil fuels aren’t willing to outcompete fossil fuels in reality but instead demand massive government favoritism is that in the vast majority of circumstances solar and wind are not actually cheaper.
If solar and wind were cheaper, much-hated fossil fuel use wouldn’t still be growing
- That solar and wind aren’t actually cheaper than fossil fuels should be obvious from the fact that despite enormous cultural and political hostility toward fossil fuels that makes fossil fuels artificially expensive, fossil fuel use is still growing.
- Notably, fossil fuel growth is centered in the places that care most about cheap energy, above all China—which is using record amounts of coal to produce the solar panels and wind turbines we use. If solar and wind were cheaper they’d use solar and wind to produce solar and wind.
- When China is concerned about its grid reliability, it starts building more coal power plants, not more solar and wind farms, to boost supply. In late 2022, the Chinese government permitted about 2 new coal plants a week.
- China, despite being the world’s leading producer of solar and wind (using coal) is also using record amounts of oil. Why not just use solar and wind instead, since “solar and wind are cheaper than fossil fuels”?
Because solar and wind aren’t cheaper. In most cases, they’re totally incapable of replacing oil.
- To deny the blatant reality that solar and wind cannot outcompete fossil fuels, opponents of fossil fuels use a fallacy I’ve never seen anyone identify in this context: “false generalization”—taking something that’s true in rare circumstances and falsely generalizing it to all circumstances.
The fallacy of false generalization
- Claims that solar and wind are cheaper than fossil fuels take rare use-cases in which solar and wind are, or might be, cheaper and then falsely generalize that they are always cheaper—even though they’re usually expensive or impossible.
When discussing “energy prices” we must recognize that “energy” refers to myriad specific use-cases involving different
- Types of machines
- Reliability requirements
- Locations
- Quantities
For the vast majority of use-cases solar and wind can’t compete with fossil fuels.
Types of machines, solar and wind vs. fossil fuels
- For most types of machines we use today—which burn fossil fuels directly for transportation, industrial heat, or residential heat—solar and wind can’t come close to competing with fossil fuels. Yet they are portrayed as generally “cheaper”!
- While it is very common to use the terms “energy” and “electricity” interchangeably, the fact is that the vast majority of machines in the world today don’t run on electricity—they run on the direct burning of fossil fuels, because that is the only or cheapest way to run them.
- The top 4 types of machines, by energy use, are: transportation machines that burn fossil fuels, all machines that use electricity—using multiple fuels, (including 60% fossil fuels globally), industrial heat machines that burn fossil fuels, and residential/commercial heat machines that burn fossil fuels.
- The reason the vast majority of the world’s machines today use the direct burning of fossil fuels, instead of electricity (from any source) is cost-effectiveness. Direct burning is the only way to power many transport machines, and the cheapest way to power many heating machines.
- Oil, the densest fossil fuel, is a highly-concentrated yet stable energy source. This makes it uniquely good for transport, which benefits from as much energy per pound as possible. In some cases, e.g., airplanes and cargo ships, there’s no real electric alternative to oil at any cost.
- Solar and wind advocates sometimes promote battery-powered ships and airplanes, dishonestly ignoring the fact that these are costly showcases incapable of cost-effective transcontinental flights and long-distance transport, which is the lifeblood of our global economy.
- For airplanes and cargo ships, solar and wind aren’t just not cheaper than fossil fuels,” they are infinitely expensive because they cannot do what fossil fuels can do.
E.g., they can’t fly 200 people from LA to London or move 400 million lbs of cargo from Korea to Brazil at 25 MPH. - While the high levels of heat industry requires (e.g., for steel-making) and the lower levels of heat residential or commercial areas require can be provided by electricity, it is often far cheaper to burn fossil fuels directly vs. going from fuel to electricity to heat.
- Even if solar and wind were somewhat cheaper than fossil fuels at providing electricity—which they rarely are, due to unreliability—they still would be expensive or impossible as replacements for fossil fuel heating and transport.
Yet they’re portrayed as generally “cheaper”! - Anyone who promotes the idea of solar and wind being generally cheaper than fossil fuels for “energy” as such—when solar and wind electricity is obviously expensive and/or impossible for fossil fuels’ non-electricity uses—is ignorant and/or incompetent and/or dishonest, and should be ignored.
Reliability requirements, solar and wind vs. fossil fuels
- Solar and wind clearly can’t outcompete fossil fuels for transport and heat.
- And solar and wind can’t even outcompete fossil fuels for most electricity due to reliability requirements.
- Yet the irrelevant price of unreliable solar and wind is used to claim cheapness!
- Reliability is the ability to provide energy when needed, in the amount needed. While some energy uses have relatively low reliability requirements—e.g., a pool heater doesn’t need to work at an exact time—most have high reliability requirements. Including most electricity use.
- While someone living a very modest off-grid lifestyle might not have rigorous reliability requirements for electricity, a modern electric grid absolutely does. To operate safely the grid must precisely, reliably control the supply of electricity to meet ever-changing demand.
- Because reliability is paramount to electricity, when comparing electricity prices—e.g., fossil fuels vs. solar and wind—we must only compare prices for reliable electricity. Yet it’s common to compare the price of reliable fossil fuel electricity to unreliable solar and wind electricity.
- Many instances of “solar and wind are cheaper than fossil fuels” not only ignore the non-electricity uses where solar and wind are totally uncompetitive, they use a bogus metric called “Levelized Cost of Energy” (LCOE) which by its own definition ignores the issue of reliability!
- The constantly-used Lazard “Levelized Cost of Energy” (LCOE) analysis explicitly says “This analysis does not take into account… reliability-related considerations.”
Such an analysis is worthless. But it is used widely to misrepresent solar and wind as cheap.
- The basic cost problem with solar and wind is their inherent unreliability. To use them to deliver reliable electricity we need to also pay for a reliable life-support grid (e.g., gas plants). This is very often wasteful; it’s usually cheaper just to pay for a reliable grid.
- When we look at large regions that use solar and wind a lot, we see a trend of price increases and/or reliability decreases, because solar and wind add costs to the reliable grids needed to support them—and if you try to save money by shrinking the reliable grid you get reliability problems.
