{"id":372724,"date":"2025-03-29T18:11:26","date_gmt":"2025-03-29T17:11:26","guid":{"rendered":"https:\/\/climatescience.press\/?p=372724"},"modified":"2025-03-29T18:11:28","modified_gmt":"2025-03-29T17:11:28","slug":"claim-renewables-are-cheaper-because-of-fuel-volatility","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=372724","title":{"rendered":"Claim: Renewables are Cheaper Because of Fuel Volatility"},"content":{"rendered":"\n
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From Watts Up With That?<\/a><\/p>\n\n\n\n

By Roger Caiazza<\/p>\n\n\n\n

When questioned about affordability, New York Climate Leadership & Community Protection Act<\/a> (Climate Act) proponents have claimed that renewable energy development can reduce costs.  This article responds to their argument that reduced fuel price volatility will make renewables cheaper.<\/p>\n\n\n\n

The December 18, 2024, New York Assembly Committee on Energy\u00a0public hearing<\/a>\u00a0enabled legislators to question New York State Energy Research & Development Authority (NYSERDA) and New York State Department of Public Service (DPS) staff about Climate Act progress. Jessica Waldorf, Chief of Staff & Director of Policy Implementation, DPS was asked what impact Climate Act GHG emission reductions would have given that New York emissions are smaller than the observed annual increases in global GHG emissions. Waldorf said that there are other reasons \u201cto build renewable energy resources in New York that are not just related to emissions.\u201d\u00a0 She gave two reasons: energy security and price volatility.\u00a0<\/p>\n\n\n\n

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The other thing I would say about energy security is price volatility.  Customers are beholden to the whims of the fossil fuel industry and the up and down markets that we see from fossil fuels.  Localizing our energy production and renewables allows us for price stability.  That is definitely a benefit of building resources here. <\/p>\n<\/blockquote>\n\n\n\n

The claim was also made at an New York State Energy Plan<\/a> Planning Board<\/strong> on March 3, 2025<\/a> to adopt the scope for the state energy plan the claim was mentioned.  The presentation<\/a> by Jeff Freedman from the Atmospheric Sciences Research Center, University at Albany, Albany, New York included<\/a> the following slide that makes the claim that renewable energy can reduce costs.<\/p>\n\n\n\n

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One characteristic of the NYSERDA documentation is lack of detail, so it is not surprising that the justification for the claim is not readily available. Table 6-1 was in New York State Climate Impacts Assessment Chapter 06: Energy<\/a>.  That chapter does not address renewable energy costs specifically.  I searched for references for costs in the chapter and found only one relevant reference on page 370:<\/p>\n\n\n\n

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Energy costs: Fossil fuel prices are increasingly volatile, largely because they are traded on global markets. In contrast, a power sector composed of large volumes of renewable resources that have no fuel costs could lead to less volatile energy bills due to the elimination of this driver of variability in energy costs. The presence of distributed resources amplifies this effect. Whether the costs of a clean power sector are lower than, comparable to, or higher than the status quo, they will be more predictable and less likely to create indirect costs that arise from unexpected price changes.<\/p>\n<\/blockquote>\n\n\n\n

The presumption in this article is that the basis of these claims that renewable energy will be cheaper and less volatile is that a renewable energy dependent electric system will have less unstable fuel costs resulting in cheaper and more secure energy.  This in turn is based on two presumptions: fuel prices are volatile because of global markets and renewables would eliminate this cost driver.<\/p>\n\n\n\n

Fuel Volatility<\/strong><\/p>\n\n\n\n

The US Energy Information Administration (EIA) noted in June 2024 that<\/a> fossil fuel price volatility has shown significant changes over time, with recent years experiencing particularly high levels of volatility: \u201cIn 2022, natural gas price volatility reached extreme levels, with historical volatility peaking at 171% in February 2022, the highest since at least 1994.\u201d  Note that EIA is only discussing natural gas volatility which has become a much larger electric generating fuel source in recent years.  In my opinion, the increasing reliance on a single fuel could be the fundamental reason for the observed increase in volatility.<\/p>\n\n\n\n

In any case, the New York agency global market argument picks just one driver for fuel price volatility.  The EIA  gave other reasons for natural gas variability<\/a> in August 2022:<\/p>\n\n\n\n

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Increased uncertainty about market conditions that affect natural gas supply and demand can result in high price volatility. Events that have contributed to changing market conditions include:<\/p>\n\n\n\n