“The Economic Fall and Political Rise of Renewable Energy”

“The modern history of wind power and on-grid solar power can be summarized in four words: economically incorrect, politically correct. U.S. companies invested heavily in renewable energy technologies in the 1970s/80s only to suffer losses and, in most cases, to exit. Only massive taxpayer and consumer subsidies in the 1990s reversed these market verdicts, leading to today’s government dependence.”

Last week, the Texas Public Policy Foundation (TPPF) published my research paper, The Economic Fall and Political Rise of Renewable Energy. This study is drawn from chapter 13 of Enron Ascending: The Forgotten Years, 1984–1996, which reviewed Enron Corp.’s game-changing forays into solar power (1995), wind power (1997), as well as in other alternative energies.

Major Points

The Press Release made these five points:

• Renewable energy had almost a 100% market share throughout human history until it was replaced by more affordable and efficient mineral, carbon-based energies that powered the industrial revolution and vastly increased living standards.
• The birth of wind power as commercial energy began in California in the early 1980s. The winds were no stronger than before, but government largesse kicked in as a misguided response to the 1970s energy crisis.
• Massive government subsidies to solar and wind energies over four decades have enriched companies like Enron and NextEra but have failed to make these sources of energy competitive with fossil and nuclear fuels.
• Corporate cronyism has cost consumers and taxpayers billions of dollars, making energy in American less affordable and reliable.
• Human ingenuity and innovation free of government intervention continue to enable the ever-expanding use and ever-decreasing cost of modern fuels to support our daily energy needs.

And some quotations from the Introduction:

• The history of renewable energy spans the history of man. From the Stone Age until recent times, the market share of renewables was virtually 100 percent. The pre-industrial inanimate energies were woody matter, falling water, and rudimentary capture of wind and solar.
• Modern energy is the story of innovation and expansion within the fossil-fuel family, far less outside of it where government intervention has only made the uneconomic and unsuitable less so. The fossil-fuel revolution is the story of incremental improvement via human ingenuity, what Julian Simon called the ultimate resource.
• Despite a four-decade effort, wind power, solar power, and ethanol are still not competitive against conventional carbon-
  based energy. Electric vehicles are also uneconomic on a stand-alone basis compared to the internal combustion engine. But government intervention via tax credits, ratepayer subsidies, and mandates has turned back the energy clock, as it were.
• A free-market, consumer-driven, taxpayer-neutral playing field will virtually eliminate the wind power industry, reduce solar power to its off-grid niche, and reduce ethanol’s blend in motor fuel to its oxygenate-only level. Electric vehicles would be a specialty item rather than a mass-produced alternative.

The argument from history complements the theoretical arguments against wind power and (on-grid) solar power as primary energies for the modern era. It is not surprising that special government favor has been, is, and will be necessary for inferior energies against nature’a bounty of mineral energies. Think energy density; think intermittency.