The Economist Ignores Reality, Highlights Flawed Renewable Energy Study

, , Senior energy analyst | August 13, 2014, 1:38 pm EDT
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A recent article in The Economist covers a study comparing the costs of solar, wind, hydro, nuclear, and natural gas. Alas, the study starts with a fundamental misunderstanding of how our electricity system works, and goes  downhill from there. And The Economist’s attention unfortunately helps to perpetuate those errors. Here are five examples of what went wrong.

“Good question, wrong answer”

Pollution from coal-fired power plant

What do we use to get beyond coal? Good question, and finding the answers depends on having solid information about options.

In his paper, Dr. Charles Frank, an economist and Brookings Institution nonresident senior fellow, usefully assumes that we need to look at low-carbon alternatives to coal, and that we want to do that as cost effectively as possible.

And, as energy superguru Amory Lovins points out in his helpful rebuttal, the study rightly considers that there’s more to energy than just how much is produced, that when matters, too.

But even a good question leads to wrong answers, as Lovins says, when you set up the analysis incorrectly and populate it with outdated and erroneous data and perceptions. Things go quickly astray in the Frank paper, with the result that he and his readers (including The Economist) end up someplace that doesn’t match reality or experience.

Five mistakes

The Lovins analysis (and a related Forbes article) and others’ (here and here, for example) do a good job of dealing with a range of issues with the new paper.

I’ll focus on five mistakes of particular interest:

Credit: J. Rogers

Credit: J. Rogers

  1. Frank’s renewables performance assumptions are outdated and wrong. The analysis uses average capacity factors from 2003 to 2012. That may be fine for nuclear and large hydro, which haven’t seen a whole lot of innovation in recent years, but does rapidly improving technologies a big disservice. New wind turbines, for example, are much larger than they were in 2003, more efficient, and perched on much higher towers. (See LBNL’s great annual wind updates for great information on technology and cost trends.)
  2. His cost assumptions are outdated and wrong, too. Frank’s study draws on U.S. Energy Information Administration cost data, which as UCS has pointed out, dramatically understate the costs of nuclear, and are consistently behind the times when it comes to the rapidly declining costs of solar and wind. Frank also ignores an appreciable portion of the substantial subsidies that nuclear power garners and, as Lovins points out, even unhelpfully lowballs wind projects’ useful lives.
  3. Variability isn’t the same as intermittency or “unreliability.” Frank perpetuates myths about the reliability of wind and solar, and ascribes to them all kinds of costs or deratings because of their variability. “Nobody familiar with grid integration of variable renewables would dream of using Dr. Frank’s crude methodology,” says Lovins. Frank also fails to account for the risks associated with large, single-unit sources such as nuclear reactors (think water-related troubles, for example).
  4. No power source works in a vacuum. Part of the reason for Franks’ fixation with variability is his treatment of each power source independently. As energy expert Jigar Shah puts it, the study is basically saying, “‘How do you replace a 24-by-7 generator with a 24-by-7 equivalent with wind and solar?’, when that’s not how generation planning is done.” Unless you’re living on a microgrid, which you’re probably not.
  5. Reality shows something different. Studies are fine, but when reality shows something very different—on costs, performance, trends, or renewables integration, for example—it’s wrong to ignore those realities. We know costs for key renewables are dropping and efficiencies are increasing. We see significant amounts of renewables being integrated with minimal extra costs. And people in positions to know see much more integration happening with little difficulty. When the 13-state grid operator PJM looked at a future with 30 percent variable renewables, it said, “No problem.”

The real benefits of solar and wind


You can’t get there from here. The climate risks of natural gas. (Source: UCS)

Frank concludes that natural gas combined cycle plants, followed by nuclear, are the way to go.

Even using Frank’s methodology, however, and just changing inputs to better reflect the real world, as Lovins reports his colleague has done, leads you to a very different conclusion, with wind and solar ahead of gas and nuclear.

And the kicker? Natural gas clearly can’t get us where we need to go on climate change. So any study that concludes that natural gas is the cheapest way to get there warrants careful scrutiny of its inputs, assumptions, and methodology.

The Frank study—and The Economist’s coverage of it—just don’t hold up to that scrutiny.


Posted in: Energy, Global Warming, Nuclear Power Tags: , , , , ,

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  • alpha2actual

    Denmark generates the equivalent of about 19% of its electricity demand with wind turbines, but wind power contributes far less than 19% of the Nation’s electricity demand. The claim that Denmark derives about 20% of its electricity from wind overstates matters. Being highly intermittent, wind power has recently (2006) met as little as 5% of Denmark’s nnual electricity consumption with an average over the last five years of 9.7% the balance is exported to Norway and Sweden which in effect act as storage batteries because of their hydropower capacity.

    • ucsjrogers

      Thanks for highlighting that interconnectedness, alpha2actual. As of the end of 2013 Denmark actually generates electricity from wind equal to about 34% of its annual electricity consumption. That’s amazing, and, as you point out, made possible in part because of its connections to other countries and the storage possibilities in hydro.

      Having wind power as a Danish export as part of a regional approach to meeting electricity needs seems like a great thing for Denmark and its neighbors. The same can be said for some U.S. states, and will likely become true for solar as well, as states develop more and more capacity that can be made available in the afternoon to serve themselves and neighbors.

      – John

  • alpha2actual

    In the absence of large-scale electricity storage, any modern electricity system must continuously balance electricity supply and demand, because even small variations in system voltage and frequency can cause damage to modern electronic equipment and other electrical equipment.

    Wind power is stochastic,especially in the very short term (e.g., over any given hour, 30 minute, or 15 minute period). This has created a completely new challenge that transmission system operators (TSOs) all over the World are only now learning how to handle. Some draw from Denmark’s experience. But Denmark’s special circumstances make its experience of limited transferability elsewhere.

    Denmark manages to keep the electricity systems balanced due to having the benefit of its particular neighbors and their electricity mix. Norway and Sweden provide Denmark, Germany and Netherlands access to significant amounts of fast, short term balancing reserve, via interconnectiors. They effectively act as Denmark’s “electricity storage batteries”. Norwegian and Swedish hydropower can be rapidly turned up and down, and Norway’s lakes effectively “store” some portion of Danish wind power.

    • ucsjrogers

      Indeed, a2a: Good neighbors make good neighbors. See my comments about Denmark above. Thanks. – John

  • John Wondra

    Of course, you could always look to actual implementation of the available resources to get an idea of “reality.” The Economist is far from a pro-fossil publication; and I think the goal was to offer an insight into why real-time experience differs so much from what was expected; Germany being a prime example of best intentions and technology unable to cope with human demands and technological constraints.

    • ucsjrogers

      i think you’re right, John. But my objections have to do with the fact that, if you don’t use the best, most accurate numbers available — if you ignore reality as represented in real-world costs and performance — you don’t get very useful insights. There are plenty of examples of states or countries finding ways to integrate much larger levels of renewables than the Frank study seemed to be considering. And again, there are studies from grid operators themselves showing what that would look like. Those are important benchmarks. Thanks, John. – John

  • O. Frackit

    Getting from A to B implies a practical path must be mapped. That’s where you “misunderstand how our electric system works”, Mr. Rogers. See, if you actually had all that magical wind and solar power at your fingertips, ready to plug in as a fully sufficient substitute for all carbon-based fuels, well, there would be no problem except cost. But, Mr. Rogers, you do not have that hardware nearly up to capacity, do you? From a practical perspective probably the very best we can actually accomplish out in the real world would be to wean our electric system off coal. To do that there must exist sources that are right now, this very moment ready at hand to be substituted in full measure. That’s not wind and it is certainly not solar. Natural gas is the logical substitute along with nuclear (if you can get past the anti-nuclear fearmongering). Now, Mr. Rogers, you just keep improving the capacity and availability of your over-rated wind and solar energy generators and maybe you will eventually be ready to wean us off natural gas someday, eh? You have a lot of work to do if you are to succeed at this. That’s real work – not just more lavishly embellished dreaming and boasting. Out here in the real world, in the real economy we reject the sort of wishful thinking you trade in here at UCS. When you bring us the real deal we will eagerly adopt it (as we always have); then and only then will you and your cronies be planet-saving superheroes. Not before.

    • ucsjrogers

      Thanks for your concern, O. The resources I pointed out to DrFredB below might of use to you. They and plenty of other resources can give you a sense of what the necessary energy transition might look like.

      Weaning ourselves off dirty coal is indeed important. As for nuclear: if you read UCS’s materials, it’ll be clear that we’re not anti-nuclear. We just point out that nuclear has to be done right, and we find that it would have a hard time competing on any sort of a level playing field.

      As for natural gas: Again, what UCS says and does could be instructive here. Right on our website (, we say:

      During our nation’s transition to a low-carbon energy future, natural gas can play an important but limited role in the electricity and transportation sectors — if policies sufficient to minimize emissions and protect communities and public health are put in place.

      I’m not sure you’d find much to disagree with in that.

      As for the work to be done: you’re right: lots to do. But the choice of pronouns is important. This isn’t something I have to do; this is a we thing. All of us are contributing to the decision making one way or another: in what projects we voice our support for or stay silent about, in what policies we advocate for, in how we use energy at home.

      And it’s happening, thanks to people who care and policies and technologies that are doing the trick. Two resources that might be of interest:

      * LBNL’s annual wind report, released today:
      * UCS’s solar report, released earlier this month:

      Solar and wind aren’t magical — just good old-fashioned ingenuity doing it’s thing. And it’s working.

      More to be done, but lots to celebrate. Right there in the real world.

      – John

  • Lana

    I am surprised the Economist doesn’t understand the concept of ‘externalities’. Coal might appear cheap in some analyses but devastating social costs of climate change cannot be ignored. Long-term public health implications must be considered. This flawed comparison of energy sources did not take externalities into account.

    • alpha2actual

      A classical example of non application of the concept of “externalities” is the banning and restrictions of DDT application on developing countries by developed countries, I believed that this is referred to as Ecological Terrorism in polite society. The effect on the populations of developing countries, body count 80 to 100 million, primarily 80% children under the age of five and women. How did this happen? Rachel Carson’s 1962 “Silent Spring” played a leading role, no?

      In Sri Lanka, malaria deaths went from 2.8 million in 1948 down to 17 in 1964 due to the use of DDT. The “intellectual elite/pseudo scientist community managed to ban DDT and by 1969, death rates were back up to 2.5 million. In addition DDT was replaced by pesticides that are often much more toxic to humans. Many environmentalists dismiss or minimize these concerns. For example, Charles Wurster, chief scientist for the Environmental Defense Fund, was asked if the DDT ban led to loss of human life. His reply was “Probably … so what? People are the causes of all the problems; we have too many of them.” He has since retracted his statement.

      • ucsjrogers

        Thanks for commenting, Lana and a2a. The Economist speaks
        often about climate change, and does get externalities, including carbon
        — as does Dr. Frank, who includes carbon costs in his study. That’s a
        good thing, as Lana points out (and which alpha seems to agree with). The problem came in what data and
        assumptions he used before applying carbon costs, which created a big
        enough (artificial) hole that even high prices of carbon couldn’t fill
        it — which doesn’t reflect the true situation suggested by better data.
        – John

  • LG

    All of the hand-wringing done by The Economist in this article from October 2013 is all you need to know about their coverage of clean energy. So much hand-wringing about how renewables make energy cheap and “the economy” loses trillions as a result. Who is “the economy”? BIG ENERGY!

    • alpha2actual

      Cape Wind Offshore wind turbine project. This project is rated at 468 mw and will produce 143 mw after applying a capacity factor of 30.4 %, as calculated by the University of Delaware of the proposed Maryland offshore project life cycle is 20 years therefore this project will produce 24.6 Terawatts life cycle. Insofar as the location of this project is enshrouded in fog 200 days a year a low wind velocity environment the 30.4% Capacity Factor appears to be overly generous.

      A combined cycle natural gas turbine plant studied by the DOE completed in 2010 is rated at 570 mw and produces 470 mw, capacity factor 85%. cost $311 MILLION. life cycle 35 years therefore this plant will produce 133 Terawatts life cycle.

      Cape wind project in nantucket sound has been approved. the project will cost $2.6 BILLON, and it has secured funding for $2 billon of that from a japanese bank. but this is believed to be subject to the project gaining a loan guarantee from the u.s. department of energy. the contracted cost of the wind farm’s energy will be 23 cents a kilowatt hour (excluding tax credits, which are unlikely to last the length of the project), which is more than 50% higher than current average electricity prices in massachusetts. the bay state is already the 4th most expensive state for electricity in the nation. even if the tax credits are preserved, $940 million of the $1.6 billion contract represents costs above projections for the likely market price of conventional power. moreover, these costs are just the initial costs they are scheduled to rise by 3.5 % annually for 15 years. by year 15 the rate will be $0.38 per Kilowatt.

      Bottom line, $311 Million 133 Terawatts. $2.6 Billion 24 Terawatts. In other words, it will take $14.4 Billion worth of Cape Wind to produce the output of one CCNGT plant.

      • ucsjrogers

        Thanks, LG and a2a. It’s clear that some utilities are going to take some time getting used to the changing nature of electricity generation and consumption, and that some will have an easier time making that switch than others.

        alpha, Dr. Frank seemed to have the same preoccupation with capacity. Ultimately what we care about is often the cost per unit of electricity. We also care about innovation and options, which is why Cape Wind and other offshore wind projects will be exciting to see come into fruition — even with higher first-time costs — and why offshore wind will be a great technology to have among our energy technology options.

        You can see some of UCS’s president’s perspective on Cape Wind in this

        – John

  • DrFredB

    (Real name Fred Bortz)

    I hope the author’s optimism here is justified.

    He and I certainly have the same goal, future “smart” electrical grids worldwide powered primarily by renewables and managed by software and hardware that seamlessly match production to consumption throughout.

    My question to him is how do we get there from here? Is it sensible to consider natural gas and nuclear as decades-long bridges that allow for a smooth economic transition while achieving our climate goals? Without world-wide policies to price CO2 into the cost of energy, will coal remain so cheap that developing countries will find it irresistible?

    It’s hard enough to envision the USA moving away from coal and natural gas, let alone the world. The devil will be in the details, even as we strive to be on the side of the angels.

    • ucsjrogers

      Thanks for your comment, Fred. You’re right that we need to look at what
      that transition would — or will — look like. Fortunately, we and
      others have. Below are a few resources you might look at. What they show
      is that the transition to a much lower-carbon electricity sector is
      feasible and desirable, in terms of emissions but also, in many cases, in terms of economics.

      you’re also right that putting a price on carbon is likely to be a
      necessary, or certainly attractive, way of helping the market make
      smarter decisions, particularly when combined with complimentary
      policies like energy efficiency and renewable electricity standards (see
      the Climate 2030 Blueprint link below),



      Renewable Energy Futures study: – a
      look at the “implications and challenges” of getting up to 80 or 90%
      renewables in the U.S. by 2050
      * Water-Smart Power: – documentation of UCS-led modeling that
      draws on part on the Renewable Energy Futures study and shows the
      potential positive economics (and water benefits) of such pathways
      Climate 2030: – an earlier look at the
      potential implications of a suite of policies to get us on the path to
      80% reductions in emissions by 2050; the numbers will have changed since
      that analysis, but it still shows how things might stack up — what those details can look like