Simulations or Country Experience? Spain, Denmark, and NREL in the Renewable Energy Controversy

For a long time, fans of renewable electricity have made their case by running simulations. Input the right data and (more importantly) the right assumptions, impose a renewable portfolio requirement or carbon plan, compute 30 years forward, and walk into a clean, fully employed future. Just close your eyes, click your heels, remember
to believe, and elect the right federal government.

Then reality intervened in the form of two country-wide case studies.

Denmark

More than a year ago, this column scooped the mainstream media with the truth about Denmark’s 20 percent wind generation. The country actually uses less than half of that power, but can keep the machines spinning thanks to (export) connections with the coal-based German grid and the nuclear- and hydro-based Scandinavian RTO.

For all this, the little mermaid enjoys the highest power costs in Europe. There is now an excellent report with lots of data by a think-tank there called CEPOS, which occupies roughly the same position that the pro-market Cato Institute does in Washington. (Disclosure: I am a Cato adjunct scholar and have taken money from them. Cato itself, like CEPOS, is supported almost entirely by private—as opposed to corporate—money.)

The study points out the sad fact that in a few years Denmark’s neighbors will be producing enough of their own wind power that their grid will have difficulty accepting Denmark’s, even if it comes gratis.

Spain

Spain is a more tragic story. The country’s bill for incredibly expensive solar and wind have become so high that government is now limiting the size of its handouts to renwables. Couple that with a recession that reduces exports, and its wind and solar industries are in collapse. Lucky they’re getting some of our stimulus—troubled wind producer Iberdrola has so far gotten $545 million from the feds.

A few columns ago, we also encountered economics professor Gabriel Calzada Alvarez of King Juan Carlos University. In his study, he used a couple of reasonable (but far from perfect) methods to demonstrate that each job allegedly created by renewables resulted in the destruction of 2.2 others. Each new employee in wind generation destroyed about twice that number.

Renewables aren’t the whole explanation for Spain’s problems: a July unemployment rate of 18.5 percent, the highest in Europe and well beyond the EuroZone average of 9.5 percent. (Holland has a low of 3.4 percent.)

I enjoy kicking dumb ideas when they’re down, for both the enjoyment and the sense that I can benefit the world if I can accelerate their extinction. But the dumb ideas recently got a new friend: you, or at least your tax money. Having spent years examining low-grade, self-serving, government-sponsored renewables research, even I was surprised to see the National Renewable Energy Lab’s unprecedented production of an official document that attacks professor Calzada by name.

Enter NREL–Inquiring Minds Want to Know

Staffers Eric Lantz and Suzanne Tegen’s “NREL Response to the Report (by Calzada)” sounds pretty official to me and announces (as it must) that, “This report was prepared as an account of work sponsored by an agency of the United States government.” It gives no background on how the task came to be, or exactly who approved spending the money. Freedom of Information Act, anyone?

NREL does have economists, but they didn’t get this job. One author
has a PhD in “energy policy,” which probably entails some economics classes, and the other has an MS in environmental studies. They use the now-standard form of “job creation by renewables” studies – assume there are scads of unemployed people with just the right skills, and that nobody has to be taxed to pay them (since doing so usually destroys jobs elsewhere – Lantz and Tegen handle this with an unsupported claim that it won’t happen).

Next comes the simulation. Crunch the input-output tables and macro numbers – often using NREL-devised software – and conclude that the higher labor requirements of renewables make them better job creators than other energy sources. It’s cash for clunkers applied to the workforce, with the same destruction of resources as the forced scrapping of operable cars. (See note below).

Lantz and Tegen are quick to point out Calzada’s blunder: he “deviates from the traditional research [“peer-reviewed”] methodologies used to estimate jobs impacts.”

Not quite. Go look in the peer-reviewed economics journals and you will never see NERL’s methods used to attack a real problem. The only people who use these simulations are other renewables fans, and peer review means that you send your work to one of them and get trifling and generally supportive comments back. The evidence? For all I know and publish about renewables, NREL has never asked me (or most other legit critics) to be a peer reviewer.

Better evidence comes from real peer review processes, such as the one at the journal I co-edit (Contemporary Economic Policy, published by Western Economic Association International). When a manuscript reaches me I pick the author’s real peers, some of whom I expect to be highly critical in their blind reviews. We have a rejection rate near 90 percent, which means that what passes our review process usually means something.

Can anyone say the same for NREL?

Note: A quick explanation of the problems in Lantz and Tegen appears in the blog of the Institute for Energy Research (a think tank funded like Cato, and I am also in their stable).

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This analysis originally appeared in Energy Metro Desk and is reprinted, with modification, with permission.