Who Pays For “Green” Energy?

These days, there is considerable obfuscation about the true costs of “green” energy–basically, wind and solar. Politicians, regulators and sometimes utilities assert that wind and solar are efficient–that they actually are price-competitive with reliable energy sources like coal and natural gas. If you know anything about energy, you know this is an absurd claim. If it were true, we could do away with all subsidies for wind and solar, but no “green” energy advocate would dream of allowing that.

The curtain dropped, perhaps accidentally, in an interview in an obscure publication by a senior utility employee here in Minnesota. The subject is Minnesota’s “solar garden” program, which promotes small solar installations as part of Xcel Energy’s effort to satisfy the state’s mandate to produce 1.5 percent of Minnesota’s electricity through solar power. (Of course, if solar were really price-competitive, no mandate would be necessary.)

The Xcel employee let the cat out of the bag:

Community solar gardens aren’t cheap for Xcel, Gabler said. Solar energy from the gardens costs the company 12.5 cents per kilowatt-hour, almost twice as expensive as utility-scale electricity.

This kind of information tends to be surprisingly hard to discern from public utility company filings. So, who subsidizes solar energy that costs twice as much as traditional energy sources? You do:

Xcel passes those additional costs onto all of its consumers by charging them more for fuel. For every 100 MW of community solar that comes online, it costs customers an additional $17 million, Gabler said.

“Green” energy is, in my opinion, a scandal. Steve Hayward authored a great report on the subject for Center of the American Experiment (“Energy Policy in Minnesota: the High Cost of Failure”), which you can read here.

FULL DISCLOSURE: I am an investor in Xcel Energy and at one time did considerable legal work for the company.