We Must Repeal the IRA to Save Money. The Studies Are Wrong.
Recently there have been studies by The Brattle Group and NERA Economic Consulting that claimed that without the inflation causing Inflation Reduction Act (IRA) our cost of electricity will increase. They ignore facts that don’t support their claim.
The IRA causes inflation. Since the estimated $2-4 trillion in spending will be added to our $36.7 trillion national debt because it is borrowed money, our growing debt and $1 trillion in interest payments increases inflation, which is completely unsustainable.
They do not consider how electricity producers are paid. The industry uses a “take and pay,” also known as a clearing price system. Through this system, they pay all generators of electricity the clearing price aka the highest bid price, but they do not pay the bid price.
This means there are no savings from so-called low-cost wind and solar. These forms of energy only cost less because of the IRA’s outrageous 50% tax subsidy; essentially, imagine the government paying half the cost to build your new home or your mortgage.
The “green” transitioners are reluctantly admitting that, because of our reality, one cannot run an electric grid on even 40% wind and solar very well, since wind produces electricity about 30% of the time, and solar about 20% of the time. With solar, it produces little or no power during the first and last hour of the day, which is during peak energy demand of 5 to 9 pm.
California and Germany are trying hard to push for “green energy.” Germans pay about four times what the average American does for electricity, while Californians pay about double. Their rates are only increasing faster than those that haven’t fallen for the “green” nightmare of ever higher utility bills, with no more options of natural gas for cooking or heating their homes.
They then ignore the trillions needed to build massive transmission wires from where wind and solar power is produced, only to lose 5-15% electricity the longer they are, like the thousand or more miles from the plains to the coasts.
They ignore the massive costs of batteries for a few minutes of stored power at scale, which costs ratepayers trillions for full backup, inflating our rates.
When a battery is discharged, it needs to be recharged before it is used again. That means there must be enough electricity to meet current needs and fill the battery before it is needed again, which requires expensive overbuilding.
Eventually, all of these wind and solar plants have to be replaced 20-25 years down the line, while natural gas and coal plants last 50-75 years on a much smaller footprint.
There are wind and sun droughts for days or weeks. We saw this in Europe, which went through an unexplained six-month period with wind production down more than 20-32%. How do batteries get recharged then? Even more overbuilding?
They do not consider that full-time electricity must have enough on demand natural gas, coal, and nuclear (hydroelectricity is good, but limited and subject to droughts) of at least 115% of the estimated highest peak demand. When it is very hot or cold during these peak demand times, electricity becomes a lifesaving resource.
The dirty secret of the green pipe dreamers is that wind and solar replace no on demand power at all—they simply displace some of it. The most expensive part of an electricity plant is building and paying for the multi-billion-dollar facility, and not the fuel.
Utilities financially benefit greatly from the “green grift.” They get a guaranteed capital rate of return of 8 to 12% on the money they spend to build electricity plants depending on your state. This means they get an 8-12% guaranteed return, which is added to your rates on both the billion-dollar natural gas plant and the billion-dollar solar plant, which leads to double the profits and higher electric rates.
Natural gas plants don’t sell as much, if any, electricity while the sun is shining, or the wind is blowing, and because they sell less electricity, they must charge higher prices, where wind and solar owners get paid more as well. Remember the clearing price scheme: ratepayers get screwed.
Wind and solar energy are 40-year-old technologies are supposedly cheaper now than ever. If they are not economically viable without massive government support, so be it. If they are as cheap as they’re claimed to be, then they don’t need inflation causing money from us, the taxpayers.
It is time to repeal the IRA. Repealing the IRA will keep our electric rates from increasing as they have been, since we have only added heavily subsidized wind, solar, batteries, and transmission wires to the mix.
Frank Lasee is President of Truth in Energy and Climate and former Wisconsin State Senator.
