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Legislators should rethink costly renewable-energy mandates

Intermittent wind and solar energy are more expensive than conventional energy fuel sources like coal, natural gas, and nuclear power.

german solar panel photo
“Subsidizing solar panels in Germany was about as useful as growing pineapples in Alaska.”

Little noticed in legislative debates over taxes and budgets, House File 956, an omnibus energy bill, is quietly working its way through committee hearings, on its way to the floor of the Minnesota House of Representatives. A related bill, Senate File 901, is on a similar path. 

HF 956 is sponsored by DFL Reps. Melissa Horton and Bill Morgan. It imposes a new Renewable Energy Standard (RES), requiring investor-owned utilities to get 40 percent of their electric energy from renewable fuels like wind energy by 2030. This is a big increase over the existing and probably unattainable 25 percent RES. The bill also adds an additional mandate for investor-owned utilities to get 4 percent of their energy fuel supply from solar energy by 2025.

The Energy Information Administration reports that for all of 2012, the United States got a little over 3 percent of its electric energy from wind, and one-half of 1 percent from solar. Although Minnesota gets more energy from wind than most other states, the leap from typical 3-4 percent to 44 percent from wind and solar is huge, even if we count on some help from other renewables such as burning biomass and some small hydroelectric power systems.

Intermittent wind and solar energy are more expensive than conventional energy fuel sources like coal, natural gas, and nuclear. To support this costly new Minnesota mandate for solar energy, HF 956 imposes a tax of 1.33 percent of a utility’s gross revenues. The proceeds, at least $30 million per year from Xcel Energy customers, will subsidize solar installations throughout the state.

The effect: a money transfer

The effect of programs like this is to transfer money from low- and middle-income ratepayers to upper-income folk who can afford to decorate their roofs with solar panels. The money collected from all ratepayers and taxpayers then is distributed to wealthy homeowners. This has been the result of the major push for solar in Germany.

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In meeting with a number of legislators this week, I got the impression that they are inspired by the example of Germany, the poster country for solar. Using $10 billion annually in subsidies, Germany now has more than a quarter million rooftop solar installations and 40 percent of the world’s solar capacity. The $10 billion is raised by fees on all electric power customers.

 In 2012, Germany produced 28 billion kwh of electricity from solar, 5.5 percent of its total electric demand. Germany also subsidizes large amounts of wind power, and wind and solar combined provided a variable 16 percent of electric demand in 2012. This required backup natural-gas plants to run in inefficient start-stop mode, increasing greenhouse gas emissions, wasting fuel, and stressing machinery.

Sudden fluctuations from renewables in Germany’s power grid are causing damage to a number of industrial companies. While many of them have responded by getting their own power generators and regulators to help minimize the risks, they warn that companies might be forced to leave if the government doesn’t deal with the issues.

It was 3 a.m. on a Wednesday when the machines suddenly ground to a halt at Hydro Aluminium in Hamburg. The rolling mill’s highly sensitive monitor stopped production so abruptly that the aluminum belts snagged. They hit the machines and destroyed a piece of the mill. The reason: The voltage off the electricity grid weakened for just a millisecond.

German customers pay surcharge

To support Germany’s renewable energy program, electric customers now pay a surcharge of 5.28 euro cents/kwh (7 U.S. cents). That’s more than the 4-5 cents/kwh wholesale cost of electric power production from U.S. fossil fuel and nuclear power plants.

Jürgen Grossmann, the CEO of Germany’s largest power utility, recently told Der Spiegel magazine that “subsidizing solar panels in Germany was about as useful as growing pineapples in Alaska.” I suggest the same analogy applies to Minnesota.

Rolf Westgard  is a professional member of the Geological Society of America and guest faculty in the University of Minnesota’s Lifelong Learning program. His current class is “America’s climate and energy future; the next 25 years.”