The following components are necessary for an economically sound energy policy.
We must have a free market solution. Free market capitalism ensures American consumers receive affordable electricity in sufficient quantities to satisfy grid demand.
Renewables are great in theory, but they are not yet economically competitive. To compete with fossil fuels, renewables (solar and wind) require subsidies at a rate twice that given to the fossil fuel industry.
We cannot economically store large amounts of power…yet. It must be produced as it is used. The game changer for the energy industry will be when mass storage becomes feasible. It’s then that renewables will take off and soar.
Until then, renewables must be backed by a constant source of power such as coal, natural gas, or nuclear. The sun doesn’t always shine. Wind fluctuates, and in the hot summer months when electric demand is at its peak, often doesn’t blow. Coal fired plants take a long time to ramp up to full power generation, but once online, provide a steady source of electricity that does not fluctuate.
Fossil fuels are cheaper to burn than renewables are to generate, but the truth is we need as much electricity as we can generate. We need all sources of energy because our electric demand is higher than it has ever been and projected to grow.
One of the largest users of electricity in the world is Google. “The Cloud” by itself uses more energy in a year than all the world’s lighting in 1985. Streaming one hour of video once per week on a phone or tablet uses more electricity in a year than two refrigerators.
We need energy.
Fracking technology has driven natural gas prices to an all time low, and as a result, coal is struggling to survive. Because of subsidies paid to renewables, electricity prices will actually go negative at certain times of the day, typically overnight, when demand is low. Negative prices mean that coal generators have to pay to put their electricity on the market instead of the other way around. Shutting down for an hour or two is not an option for coal because of the time it takes to ramp back up to full production.
Subsidies to renewables risk forcing coal out of the market. If this happens, renewables cannot fill that void economically for reasons described above, and energy bills of American consumers will rise.
Natural gas aside, coal is still the cheapest, most abundant source of energy available in the United States. Renewables will eventually reach a point where they are economically competitive on the free market. Until then, however, subsidies to renewables should be eliminated. For the sake of the American consumer, we need a level playing field.
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