Later the same month, Al Gore introduced a proposal for 100 percent of U.S. electricity to be generated from renewable energy within 10 years. The Google web page for their plan references both schemes, stating that the intention of the latest proposal is to continue to move the discussion forward. The actual direction is away from reality.
The 380,000 MW of wind power is substantial and must be put into perspective. There is currently about 20,000 MW installed in the U.S., so we would have to increase installed capacity by almost 2,000 percent and add thousands of miles of new transmission lines. The strongest wind resources, it should be noted, are far removed from population centers.
We simply do not have enough domestic manufacturing capability to produce that many turbines—already 60 percent of wind turbines installed in the United States are imported. If, as Mr. Pickens worries, we are transferring wealth to foreign countries by buying imported oil, how different is buying imported wind turbines?
According to Google, the price tag for the entire plan would be $4.4 trillion, but savings would total $5.4 trillion, resulting in a net payback. Google fails to explain why such a good payback—call it 23 percent— is not pursued by private interests with private capital. Tax subsidies account for nearly 40 percent of the revenues of renewable energy sources—take that away and the 20 percent positive return turns negative.
There is no net payback other than tax transfers, as wind continues to be more expensive than traditional sources and is less reliable. Wind energy costs anywhere from 15 to 40 percent more, yet operates only 30 percent of the time. Mass production of turbines might reduce the cost premium, but cannot affect the operations profile, which is dictated by the wind. Mass production could just as easily drive the costs of wind upward, as critical commodities such as brass and cement continue to increase in price.
The reality gap between real energy solutions and those offered by rent seekers is obvious. Google’s plan naively proposes eliminating fossil fuels. Wind, solar, and other renewable sources are a tiny part of our energy consumption. Even exponential growth, would still provide less than five percent of U.S. electricity, not counting hydroelectric.
According to the Energy Information Administration, coal accounts for 49 percent of electricity generation in the United States, nuclear about 19 percent, and natural gas 20. The renewables that Google prefers only produce 2.4 percent. Electricity demand is growing in the U.S. at about one percent per year, after accounting for improved energy efficiency and economic growth. Wind energy would have to grow by more than a thousand percent by 2030 just to keep pace with demand growth.
These renewable energy sources are still decades away from economic viability and currently survive solely on taxpayer subsidies. Even the wind industry admits there would be little to no additional development without the tax subsidies. As experts recognize, fossil fuels will continue to provide a majority of our energy for decades.
The folks at Google may not be energy experts, but they are certainly shrewd businessmen. Their plan positions the company to reap billions in benefits from taxpayer subsidies, not from providing meaningful products or services. The most effective energy policy, however, will emerge from those who seek the rewards of entrepreneurial innovation rather than a windfall of taxpayer dollars.