Huge subsidies for renewable electricity produces minor results

The Wall Street Journal highlights data showing the solar industry gets subsidies for electricity at 1,000 times the rate going to oil and gas. In return, the industry provides negligible output of electricity.

The oil & gas industry gets subsidies of $654M for providing 25% of the electricity we use. Solar get $968M, almost a billion bucks, in return for providing 0% of our electricity.

Yes, 0%. Rounded to the nearest percent, the output is zero.  Let’s move the decimal place out and try again.

We get 0.0% of our electricity from solar. Okay, let’s move the decimal place again.

We get 0.03% of our electricity from solar.

Wind industry gets $4,986M in return providing 2% of our electricity.

What if we swap the subsidy rates?

I got to wondering. What if we subsidized electricity from oil at the rate we subsidize solar? Or how about subsidizing solar at the rate for oil and gas? I got some entertaining results.

If we subsidized electricity from solar at the rate we subsidize oil & gas, we would give the industry less than a million instead of $968 million. 

If we subsidized electricity from oil and gas at the rate we subsidize solar, we would turn over $792,607M to the industry instead of $654. Eight hundred billion instead of under a billion.

How do the subsidy rates compare to consumer electricity rates?

Here is a simple comparison. Hey, I’m a simple guy.

I paid my electric bill after reading the stats. So of course I calculated what I pay for electricity and compared it to the subsidies.

The subsidy rate to oil & gas for electricity is 0.06 cents per kilowatt-hour.

For electricity from solar? The subsidy is 77.56 cents per kilowatt-hour. The subsidy is four times the average rate I pay.

Here’s my calculations

The Wall Street Journal editorial is The Energy Subsidy Tally.

Here are the stats used for this post. The first two columns are from the WSJ editorial, as provided by Department of Energy and Institute for Energy Research. I calculated the other columns.

 total, in  $/mega-
 US$  watt    MW  % of  at oil  at solar
 millions  hour  hours  total  subsidy  subsidy
 oil and gas         654  $  0.64    1,022 25.4%        654   792,607
 hydro         215  $  0.82       262 6.5%
 coal      1,189  $  0.64    1,858 46.1%
 nuclear      2,499  $  3.14       796 19.8%
 solar         968  $775.64           1 0.031%        0.8         968
 wind       4,986  $ 56.29         89 2.2%          57    68,704
      —–       —–
 total      10,511     4,028

Here is my calculation of subsidies in kilowatt-hour compared to what I just paid:

 my rate:  $0.190  $0.277
 $/kilowatt  % of my  % of my
 hour  average  marginal
 rate  rate
 oil and gas  $      0.0006 0.3% 0.2%
 solar  $      0.7756 408.2% 280.0%
 wind  $      0.0563 29.6% 20.3%

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