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Do we want cheap energy or do we want to protect the planet?

It is becoming increasingly clear that if we want to bring climate change under any sort of control we will have to pay more for our energy, at least during the change-over period. Which way will Mankind chose to go?

It seems to me that there are three choices:

  1. Quickly drop the fossil fuel habbit and accept that there will be some significant costs involved in the change-over to renewable energy;
  2. Stay with business as usual and accept that the Earth will be a very different, and much inferior place, in a generation or two;
  3. Ignore the science; say that climate change isn't happening and try to convince ourselves that we have nothing to fear.
There is a page devoted to our addiction to cheap energy elsewhere on this site.

Written 2014/04/22, last edited 2023/10/03
Contact: David K. Clarke – ©
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Introduction: addicted to cheap energy

 

How to put a price on energy from animals?

If a farmer had to devote an eighth of his land, and probably a similar proportion of his time, to his draught horses their energy must have been very valuable to him. But puting a price to it is not easy, especially when the value of money has changed enormously.

We could say that if a farmer was to support his family he would have had to produce the equivalent of a living wage. Then if an eighth of the productivity of his farm and his own time was devoted to his horses, we could say that they cost him an eighth of this. A modern living wage for a family would be around $70 000 per year. So we could say that the horses cost that farmer, in modern day equivalets, about $8750 per year (an eighth of $70k).

As a very rough approximation, we have one horsepower from each of six horses for, say, eight hours a day for 100 days of the year. One horsepower equals 0.75kW. So $8750 bought the farmer 6 × 0.75 × 8 × 100 = 3600kWh of energy. That is, he paid about $2.43/kWh for his energy. In Australia in 2014 we pay about $0.25 for our electrical energy. We pay about $1.45 for a litre of petrol, which 'contains' around 10kWh of energy, so we pay $0.15/kWh for the energy in petrol (gasoline in the USA).

I have written about putting a cost on human power elsewhere on these pages.

Three hundred years ago our energy came from our own muscles and from those of our draught animals. A significant proportion of a farm was required to produce food for the draught horses: perhaps a eighth of the farm (a single draught horse needs about a hectare of land to grow its food). Farms were much smaller than at present. At least six horses fit for working were required at any one time; others were too young or too old to work. Our energy and the energy of our draught animals was valuable.

Around the end of the nineteenth century the motor car with its internal combustion engine was developed. According to Autoblog the engine of the Model T Ford, released in 1908, developed about 20 horsepower. The fuel to power the car was pumped out of the ground and refined by a fairly simple process. Energy became more accessible and much cheaper. Autoblog tells us that by 1955 the average car was developing around 140 horsepower and by 2009 it was up to 247.

So long as we could simply pump oil out of the ground, process it quickly and easily, and burn it for energy we had a plentiful supply that was much cheaper and more convenient than the energy of draught animals. We became addicted to it.

A similar story could be told about the development of electric power. The main difference with this was that it was often (especially in Australia) generated by burning another fossil fuel: coal rather than oil.

And the process fed off itself. Cheaper energy to power drilling rigs and mining machinery meant that we could drill new oil wells and mine coal more cheaply than ever before.

In the early twenty-first century we need to kick the cheap fossil fuel energy habit because climate change is going to destroy the world as we know it, but at present all indications are that we – as a global society – can't.

 
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What about renewables?

Peterborough Solar Farm, South Australia
Peterborough Solar Farm
Photo taken with my drone, 2018/05/12

 

Update 2021/04/05

The situation has changed since the time of writing, 2014. Renewable energy being sold into the wholesale electricity market has become so cheap that old coal-fired power stations are loosing money for their owners. Intended closing dates for the old clunkers are being brought forwards to cut losses.
We have to face the fact that, at the time of writing, while renewables such as wind and solar PV are now cost-competative to new coal- and gas-fired power stations, there is a cost in the change-over. It is cheaper to keep an old coal-fired power station going for another few years than to retire it and replace it with new wind or solar farms.

Not only that, but as wind and solar PV are not necessarily available when and as we want our energy there will be other costs, either in storing energy or in limiting our consumption depending on energy availability (demand side management).

When we look at Australian and world electricity prices we see some suggestion that those durisdictions that have made the greatest effort to change to renewables tend to have the highest electricity prices. The report Electricity Prices in Australia: An International Comparison, by the Energy Users Association of Australia,
 
While Germany has expensive electricity it also is one of the most competitive nations on the planet and has a very healthy economy.

Update 2021/04/05

Things change; power prices have been falling in South Australia due to the state's high take up of renewable energy.
places Denmark and Germany, two of the countries with the highest adoption of renewables in the world, at the top of the list of the highest electricity prices. South Australia, with the highest level of recent adoption of renewables in Australia, also has very high electricity prices (but, by 2021, they were declining and that was largely due to renewable energy becoming steadily cheaper).

On the other hand NSW is just below SA on the electricity price list and that state has little recent renewable energy. Even Queensland, with practically no recent renewables at all, is much closer to the top of the list than to the bottom. Significantly, the Australian Energy Market Commission in its 2012 report Retail Electricity Price Movements stated:

"Wholesale energy costs in South Australia have traditionally been high due to the relatively small market, high dependence on gas fired generation and limited interconnection capability. This looks likely to ease with an increasing volume of wind generation that now accounts for about 24% of generation capacity."
So electricity prices are suggestive, but not conclusive. It is likely that it is the transition to renewables, rather than the cost of renewable power itself, that has pushed up electricity costs in Denmark and Germany.

Renewables are variable

The cheapest forms of renewable energy available to us in Australia in 2014, wind and solar PV, are only available when the wind blows or when light levels are high (solar panels still produce power under cloud cover, just a lower amount). Solar thermal power with storage is rather more expensive and has suffered from heavy competition from solar PV, which has the advantage of the economies of scale.

While wind and solar PV make up less than 50% of our power supply and we have gas to fill in the gaps there is no problem, but when and if we switch to 100% renewables what do we use to keep the flow of electrons going when the wind stops and the Sun goes down?

Hydro power is one option, but to develop that a country needs large hills or mountains with abundant and reliable rainfall; two items we in Australia are largely lacking.

We could use pumped hydro or batteries to store energy when it is plentiful and give it back when it is in short supply. This is quite feasible and both are proven technologies, but they come at a significant cost on top of the cost of generating the power in the first place.



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