Isaac Orr researches and writes about environmental issues, mining, and energy for the Center of the American Experiment, a think tank based in Golden Valley, Minnesota. In his third appearance on the podcast (his last was on July 12, 2022) Orr talks about the impact that Senate File 4, a new law that mandates Minnesota utilities be delivering 100-percent carbon-free electricity by 2040, the NGOs that pushed the legislation, why it will cost ratepayers an additional $300 billion, and why it will likely lead to blackouts and leave Minnesota in a “reliability hole.” (Recorded on February 22, 2023.)

Episode Transcript

Robert Bryce 0:04
Hi, everyone, welcome to the power hungry Podcast. I’m Robert Bryce. On this podcast we talk about energy, power, innovation and politics. I’m pleased to welcome back my friend, Isaac Orr. He is a policy fellow at the center of the American experiment for his third that is right, ladies and gentlemen, the third appearance on the power hungry podcast. Isaac, welcome back.

Isaac Orr 0:23
Hey, thanks for having me, Robert. Appreciate it.

Robert Bryce 0:25
Now, you know, well, I don’t have to warn you. But guests introduce themselves. You have 60 Seconds or Less go?

Isaac Orr 0:31
Sure I grew up on a dairy farm and will Paco, Wisconsin, a sprawling metropolis of 6000 people. So that really shapes my worldview. I’ve always been interested in politics. And in college, I went to school for political science in geology, because I had a geology professor who made this, he really tied the two disciplines together, right, because there’s a very political aspect of almost all things if you want to permit a landfill of mine oil and gas. So that’s been something I’ve been interested in. I’ve been working in energy policy for the last 10 years now, originally with the Heartland Institute, and now at center of the American experiment, which is a nonprofit Think Tank located in Minnesota.

Robert Bryce 1:12
Gotcha. And while pakka spell that for me,

Isaac Orr 1:15
W A up ACA while PAC SE I

Robert Bryce 1:19
knew you were from a rural town, but I didn’t know I didn’t know the name of it. Oh, yeah. Population 6000. Well, okay, since we’re talking about rural areas, one of the things that I noticed I looked up Minnesota in the 2020 elections, and like a lot of other country or states rather, there’s a very pronounced split politically between rural America and urban America, the Democrats in 2020. Biden won Minnesota by 53 to 46, roughly, I think, if memory serves. And then he went all the cities, but the rural areas of Minnesota were solid red for Trump. I don’t I’m just hitting on that because I want to come back to the purpose of what we’re talking about today, which is Senate file for which passed the Minnesota Legislature and was signed into law on February 7 by Governor Walz. But I want to I want to just note that and talk about Waupaca. And similar the rural parts of America and Minnesota because the legislation that passed and requires the state to get 100% of its electricity from carbon free sources by 2040, which is just 16 years away. This is a very big piece of legislation. And I’m guessing there was a split in the legislature over these provisions. So I’m talking too much here at the beginning. Tell me about Senate file for and what it does and what your view on that legislation is.

Isaac Orr 2:42
Yeah, so essentially, the legislation is a 100% carbon free electricity mandate by 2040. There are also renewable energy standards within the carbon free standard. So they’re gonna require 55% of the electricity generated in the state be renewable, which is wind or solar. by certain benchmark years within the legislation. I don’t have that off the top of my head, but so it does not live to Minnesota’s ban on building new nuclear power plants. Minnesota is one of the states left in the country. There’s fewer of them every year that prohibit building new nuclear power plants with Minnesota will not lift that. It was interesting because during the committee debate, one of the senators Republican senator, Senator Andrew Matthews, he represents an area that currently has a very large coal facility in Minnesota, it’s 2200 megawatts is called the Sherburne county generating station and he just wanted to have legislation that would give a basically create a study for advanced nuclear at existing coal facilities, you know, pursuant to a doe is talking about, and it was voted down on a partisan line. So this was bare knuckle politics, partisan politics in a way that I have not seen since I was in eighth in the Wisconsin State Capitol in 2011, when Republicans had complete control of the legislature, and they were enacting collective bargaining reforms and things of that nature. So you know, the process here, I guess, we can talk a little bit more about what’s in the bill. But there’s all these requirements for prevailing wage on these, you know, renewable energy projects. So that’s how they were able to get labor unions on board. So, you know, these things sound great in theory, but they’re also going to effectively increase the cost of complying with these mandates in the future. There was also some discussion about, you know, was this legislation too far reaching in terms of interstate commerce, because it said any of the retail electricity sold in Minnesota and needed to be carbon free, and the state of North Dakota said Now hold on. Some of your electric companies also do business in minutes are in North Dakota and you’re not allowed to, you know, basically dictate to them how they do business outside Out of your state pursuant with the Commerce Clause, so the state of North Dakota is actually initiating a lawsuit over this legislation? Well, I guess this law now, right, it’s no longer legislation, arguing that it violates the Dormant Commerce Clause. So we’re gonna see how that plays out as well. And then the last thing here, that I’d like to talk about is Rex. So renewable energy certificates. So the, you know, the the Democrats who came forward with this, they said, Oh, well, you know, if you can’t generate your own electricity, you can just buy Rex. So that’s, that’s interesting. You know, for the listener, the, the wreck is a Get Out of Jail for a fee card that people try to, you know, reconcile these these mandates that are not possible to meet, you know, they say you can continue using your coal plant, you just need to spend five to $8 a megawatt hour on top of whatever it already cost you to generate that electricity, to purchase a wreck and retire it. So those are

Robert Bryce 6:03
those those and those wrecks, just to be clear, could be from other solar project when project doesn’t even have to be in the state. Right. This is like, as you say, a Get Out of Jail Free card, I would call it a carbon indulgence that Martin Luther would would recognize. Right. But this is part of the other part of this legislation. That is I guess I would call it a sleight of hand, right? That if you can’t achieve this goal, then you’re going to have to do some other thing. That is not as out of market, right, that is going to give the appearance of of compliance. Is that a fair way to think about it?

Isaac Orr 6:36
Oh, yeah, absolutely. It’s greenwashing. Right. So these can be anywhere in the country, you can purchase your rack from the Bonneville Power Association, right? So you know, huge hydro dams out there. So they generate a lot of rats, and they find a way to get more money from them. But yeah, it’s it is essentially a climate indulgence.

Robert Bryce 6:55
Well, so walk us through some of the things that you found because you and your colleagues, Mitch Rowling and John feelin wrote a report last September, anticipating this legislation. And you did it for the senator of the American experiment. And you the report is called the high cost of 100%. carbon free electricity by 2040. That report is on American You said that the this mandate, proposed at that time by the Governor Tim Walz would cost the state $313 billion through 2050 and lead to devastating blackouts. Walk us through the numbers, because as I looked at the report, I was thinking there was one finding, you said that was something like this is going to increase electric bills for consumers by something like $3,000 per year, every year. I mean, there were some really eye popping numbers here. And I said, really the see this doesn’t sound right, but walk us through some of those numbers, if you would.

Isaac Orr 7:48
Yeah, it sounds pretty wrong, doesn’t it? Robert?

Robert Bryce 7:52
Yeah, I mean, it sounds like Oh, it can’t be that expensive. It got how could it possibly be that Right?

Isaac Orr 7:56
Exactly. Yeah. So what we did is we matched the bill, take a step back. Yes. So $313 billion in additional costs relative to today. Right. So we took the cost of the existing grid we looked through, we found FERC, form one filings, and we got the actual cost of producing electricity from each of the power plants that are on the Minnesota grid today. Right. So we were able to, you know, have that as our baseline. So, you know, the nuclear plants in Minnesota generate electricity for about $37 a megawatt hour, the coal plants on the system, I think it was something along $38, natural gas prices were lower in 2019. We use that gas price assumption. So the natural gas plants for about 25. But even you know if today the cost is almost back down to where it was previously. So but then we wanted to compare that to Okay, well, what’s the cost of maintaining a reliable grid using wind, solar and battery storage, because we anticipated that the Democrats would not allow for new nuclear power plants to get built in Minnesota. And then we also wanted to have like an alternative scenario where we look at, okay, well, what if we tried to decarbonize with dispatchable low carbon technologies like carbon capture and sequestration, large nuclear power plants, we’d like to model the APR 1400 Because it has a history of being built on time and on budget in different areas like the United Arab Emirates. And then we also looked at small modular reactors. So we had two scenarios. In our paper, we had something we called the walls proposal, and then we had something called the lower cost, decarbonisation or LCD scenario, right. And the the huge cost of the walls proposal really stems from the fact that you need to build a lot of wind, solar and battery storage in order to make up for the fact that sometimes they’re producing a lot, but sometimes they’re producing almost nothing at all. And really, when you’re building a system, you need to be able to accommodate your peaks of electricity demand. But if you’re going to have a system that is largely intermittent, You need to be building around the trough. So you need to be making sure that you have enough excess capacity on your system to make sure that you can meet demand, even when the capacity factor of wind is one and a half percent for 42 hours straight, which it was in my cell and 2020. So that as a result, I think we had to build something along the lines of 47,000 megawatts of wind, I think it was 15,000 or 16,000 megawatts of solar, and over 30,000 megawatts of for our battery storage in order to meet Minnesota’s peak electricity demand of 13,500 megawatts, right. So we have this massive over building, it’s like a 7x, over build over our peak capacity demand plus a reserve margin. And when you build all that stuff, it costs a lot of money. So that’s really where the the high cost of this, this proposal comes from.

Robert Bryce 10:55
Well, and I’m looking at it again, this is the study that you did the high cost of 100%, carbon free electricity by 2040. And that’s what I’ve just really jumped out at me. And you know, I’ve spent a lot of time talking and writing about land use. It’s on page 13 of the report, you say that the walls proposal would require a total wind capacity of 47,000 megawatts to be in service in the next 18 years, a capacity addition of 43,000 megawatts, I have to want to continue reading this, this means Minnesota would need to build more than 12 times more wind facilities in the next 18 years than it is built in the previous 15 years. And this is important, I think, and I really want to underscore this because Minnesota has seen some of the most heated battles over wind energy siting of any state in the country, that rural communities all across the country all across the state, rather have been fighting these projects, some of them successfully. So this isn’t a state where you have this backdrop of land use conflicts. And then there was one other thing about I’ll ignore the solar for a moment, but something else I’ve been writing about lately, it also says the proposal would require, at minimum, a 58% increase in high voltage transmission lines requiring 5800 miles, you said 5795 of new transmission in the state, these lines take eight to 10 years to build if they get built at all. So I mean, you’re talking about a massive infrastructure build out that on its face, I look at that, and I say, bullshit. It’s it’s just not going to happen. But yet was. This is the part that to me, is the big disconnect among policymakers that they don’t they, they pass these laws, this legislation, but they don’t know anything about what it looks like in the real world. And that to me, those are the things if I was gonna say summarize your thing. This is what the bottom line is here about what this looks like in the physical world. Was this even discussed among the policy makers that were pushing this that what this actually means in physical terms? On the ground? Was this ever in the part of the discussion?

Isaac Orr 13:00
Yes and no. Right. So there was a provision in this legislation that made it more difficult for rural areas to push back against these projects. So they basically made it easier to build the transmission lines that connect the projects to larger substations. And basically, they kind of pulled the New York where they put more restrictions on what local governments are able to do in terms of, you know, not supporting these types of, you know, infrastructure builds out in their local communities. So they acknowledged that they knew that was happening. So but the, the legislature did not really seriously consider, in my opinion, this legislation period, it had one committee hearing where they took testimony and one committee hearing where they, they discussed it in the Senate, and I think in the house, they passed it all in one go. They took their testimony, and they voted, voted it onto the floor, basically out of committee into the house for a whole vote with only one committee. Right. So they were very determined to pass this with as little scrutiny and oversight as possible. So, but you had all the environmental NGOs, I know you don’t like to call them that. It’s the anti industry industry was in these committee hearings. And they were saying, Oh, well, you know, Minnesota, we already had a 25% renewable energy mandate. And we met that faster than we thought we would. And for lower cost, even though they never tell you what the estimated cost was. Right? So I’m very skeptical of that. But that was before my time doing energy policy, but you know, the attitude was, Oh,

Robert Bryce 14:40
we did 25 We’ll just make it 100 No,

Isaac Orr 14:42
yeah. Why not? We’ll do we’ll do 100 even faster than we did. 25 is is basically how they think.

Robert Bryce 14:49
So who were those NGOs? The the the climate focused NGOs that were behind this and have you looked up their their numbers, their money, how much money was behind this?

Isaac Orr 15:00
BOE Yeah, yep. So yeah, you have your your usual suspects like Sierra Club, North Star chapter, they were mad that this bill allows large, large hydro to qualify as carbon free. They didn’t want that either. And then you have your kind of citizens Utility Board, right? All of these citizen utility boards around the country are funded by left leaning organizations. So they really care about renewables more than they care about ratepayers. But you had fresh energy, which is probably the most influential of the green groups over their renewable industrial complex, let’s call it the Minnesota Center for Environmental advocacy, the blue green Alliance, which is an interesting group, because they’re trying to kind of unify labor and the Green Movement. And those two things are not often in alignment, right. So in Minnesota, we also have the world’s largest undeveloped deposits of copper and nickel, and also the largest deposits of cobalt in the country. So that became a point of contention during this legislation, because, you know, it’s very frequently the same voters who are voting for these renewable energy mandates who are opposed to mining in Minnesota. So you know, where we end up sourcing this cobalt from the Congo, where kids are mining it by hand, and they’re washing the ore and rivers or, you know, and there were amendments proposed in this legislation that would have prohibited the use of solar panels, if there was a credible thought that, you know, slavery was used in it, and it all got voted down on party lines. So there’s some really interesting amendments. And some of the other amendments that were offered. So no Republican amendments were adopted on this legislation, but some of them that were offered were okay. Well, you know, you say that there are off ramps on this legislation to where utility companies can say, hey, this is going to cost too much, or it’s going to be, you know, too big of a negative impact on reliability. So we need to apply for an off ramp at the PUC. They refused to quantify what affordable meant, right? They they didn’t want any objective standard by which this could be measured. So like a 10% increase in rates from now to 2040. No, like you can’t have an objective standard. That’s an automatic off ramp. And then there was also an amendment sounds

Robert Bryce 17:19
like I’m sorry to interrupt but it just sounds like this was a power play through and through right that this was under percent right. We have the Democratic majority in the Senate, a Democratic majority in the House, you have a Democratic governor, we’re going to do this Damn the torpedoes full speed ahead. We’re not going to book any kind of discussion or even any amendments that would would deter this mandate, right. But it is a mandate, not a goal. I was looking at the governor’s statement around this, and it uses the word goal. But it sounds like this is in fact a full on mandate.

Isaac Orr 17:49
It is. So there’s been a lot of dishonesty with the way that this legislation has been, you know, presented to the public and another interesting amendment, and then I’ll stop with the process here. But they did offer an amendment that would have initiated an off ramp if there is a blackout. And the folks said no, like, even if there’s a blackout, we need to keep moving forward with this. So that’s why a lot of that’s why American experiment was calling it the blackout bill, we had over 13,000 people sign a petition basically saying, Hey, don’t don’t pass the blackout bill. And each of those generated an email to a state rep, a state senator and the governor. So we had over 36,000 emails go out, basically saying like we have a very limited lobbying budget as a 501 C three, but we can do a little bit. And we decided that this was worth engaging on in a big way. So you know, almost all of the conservative lawmakers were calling this the blackout bill, major media outlets were saying, Oh, well, conservatives are calling this the blackout bill. And we didn’t win in terms of the legislation being us obviously passed. But I am I’m pretty happy with the fact that when the blackouts hit, because they’re kind of inevitable at some point that there will be a very strong record saying, Hey, we told you so.

Robert Bryce 19:13
Well, this is I’m just looking at the statement. This is from Walters office, and it quotes the president of Xcel Energy, Chris Clark, saying we’re excited to lead the clean energy transition with its new goal to provide 100% carbon free electricity. And then later in the same press release. This is from February 7. The governor’s office is saying this. The law gives utilities planning time and flexibility they need to reach the 100% goal while maintaining reliable and affordable electricity for Minnesotans. But the part that also jumped out to me here is that the bill will require then the shuttering of all of the coal and nuclear plants in the state by 2039. We’re in 2023 here when we’re talking about 16 years from now, I mean this says a looming deadline that one of the other things you point out in your report is your in your in the reports you did last September saying we shouldn’t be shuttering any of these coal and gas plants. But the bill runs counter to what your your you’ve observed in my so so connect the dots between what this bill in Minnesota does with what Mike was saying that’s a mid counted Independent System Operator saying regarding reliability on that on that RTO?

Isaac Orr 20:27
Yeah, absolutely. So this bill would allow the existing nuclear plants to continue operating, it would be the the coal and the gas, which, you know, that’s great, because you and I are very on board with new or nuclear power plants, whether they’re existing or new. But the most interesting part about the discussion on reliability surrounding this bill was they said, Okay, well, you know, the Public Utilities Commission can delay the closure of certain, you know, co2 emitting assets, if there’s a reliability challenge. But, you know, if they, if they actually believed that that was going to happen, they wouldn’t have brought this bill forward in the first place. Because the Midcontinent Independent Systems operator, the 15, state regional grid, to which Minnesota belongs, already has a 1200 megawatt capacity shortfall relative to its planning reserve margin, right. So we have enough reliable power plants to meet our peak electricity demand, but that margin of safety that they’d like to build in, we’re not there. And miso expects that this could grow to 2600 megawatts this year. 2023. And then by 2027, we could be looking at almost 11 gigawatts of capacity shortfall based on you know, announced power plant retirements or possible power plant retirements. And, you know, the lack of new additions to backfill for that. So, you know, when we look at this legislation, right, so there are technically off ramps, there’s racks and all of this nature, but ultimately, where the rubber will meet the road is at the Public Utilities Commission here in Minnesota. And you know, Xcel Energy is excited about the prospect of closing down their coal fired power plants and building a whole bunch of wind, solar and possibly battery storage, because they get to increase their rate base and make more money off of this, like these 100% carbon free electricity mandates for a regulated utility are a license to print money. So they’re Russian.

Robert Bryce 22:27
Why is that? You see, you can put it in there. They can put it in the rate base, but it’s also because they can collect the PTC in the ITC.

Isaac Orr 22:35
Yeah, well, that’s part of it, right. But whenever a regulated entity like Xcel Energy builds a new thing, they’re allowed to recover the costs of building that thing plus a 10% profit, whenever it’s that cost is approved by the Public Utilities Commission. So you know, let’s say they have to spend $3 billion repowering wind turbines that are only 10 years old, which they recently got approval to do, then they get to make 10% on that 3 billion and you know, any PTC or ITC, that cost is going to get passed along to consumers. So

Robert Bryce 23:11
they do, the more they build, the more money they make. So exactly. They’re perfectly fine with building more.

Isaac Orr 23:17
Yeah, yep. And the other part of this is the municipalities in the coops because Minnesota has a large Rural Electric Co Op industry here. So they will not be able to pass along those costs in the same way that an investor owned utility is. So this legislation is different than previous renewable energy mandates that exempted coops and municipalities, you know, the co ops in the Munis are going to have to deal with this. And they see this as the investor owned utilities basically trying to take their market share, because they’re, they’re worried that their members won’t be able to pay higher rates even for Rex. So there was a lot of, you know, discourse from the Rural Electric Co Ops in in Minnesota over this, they were worried about this legislation. But, you know, when you look at the the members of the legislature, like as you said earlier, these these rural co ops are mostly, you know, staffed or like the districts that they’re in or republican districts. So there wasn’t that sort of familiarity with them. Maybe I’ll say or the the Democrats in the Senate didn’t feel like they had to really listen to the co ops because those are just the rural people.

Robert Bryce 24:30
Right? Well, when there aren’t many votes out there, right. I mean, that’s where the Democrats go. And let me just say this, I’m not a partisan. I’ve said this many times, not a Democrat. I’m not a Republican. I’m disgusted. But the partisan divide concerns me but it’s really the partisan divide is an urban rural divide. And that and I didn’t know that the cooperatives were not exempted because they coops in general, and I know a fair amount about the coops. I speak at many cooperative events around the country and have been for many years. I think they’re a critical part of the fabric of American society, they are the living remnants of the New Deal. And these people, you know, they are charged with providing affordable cheap electricity to their affordable, reliable electricity to their owners and your what? What you’re you’re telling me they got steamrolled here in this whole process?

Isaac Orr 25:19
Yeah, they did not get the kind of consideration that they were hoping to any kind

Robert Bryce 25:25
of exemption from these mandates so that that and you’re saying that for them that were they looking at Excel or the rest of them saying, Well, this is favors XL XL can make money on this, but we’re gonna get we’re gonna get shafted here. And did they? Did they fight it? Or did they have any any stroke at the Capitol were big? Because they’re not considered part of the Democratic machine? They were just ignored.

Isaac Orr 25:46
Yeah, I mean, they just don’t have the same kind of influence that Xcel Energy has. Right. So when you look at the lobbying reports on the state of Minnesota website, Xcel Energy is always like the second or third largest lobbyist in terms of spending in the state of Minnesota, they’re generally behind like the Chamber of Commerce, right. So Excel spends a lot of time, I think, influencing lawmakers and trying to get them on board with this green stuff. Because that, you know, ultimately allows them to maximize shareholder value by building more stuff. Right, right. So we have this unholy alliance of the green groups, the utilities and the progressive lawmakers, who all kind of want the same thing. And you know, Xcel Energy is more than happy to go along with, you know, spending more money as long as the Public Utilities Commission, which is appointed by the governor is just going to rubber stamp this stuff. So unfortunately, there really is no break here. All of these groups that you would think have diverging interests are kind of in cahoots. So that leaves us is the voice of ratepayers. And, you know, it’s a it’s a challenge, but we’re happy to do it.

Robert Bryce 26:58
Well, I want to read something because I know you’re a longtime critic of Excel, and I’m not here to defend them, but I want to read something that their former CEO Ben Phalke are folk I think is how you pronounce it. He testified before the Senate Energy, Environment and Public Works Committee on March 10 2021. This is one of the most remarkable bits of testimony I’ve heard from any utility executive. You may have heard seen this, but he said to me, he testified before the committee. By 2030, we estimate that renewable energy will make up two thirds of our energy mix. However, renewable energy can only take us so far, at higher levels of intermittent renewables. Here’s the moneyline the cost of the energy systems, since system begins to skyrocket and its reliability degrades. That means the whole industry even Xcel Energy with a remarkable renewable resources will need some form of new carbon free, like this new carbon free 24/7 dispatchable generation to move remove the last increment of emissions on our system and get to zero. Here’s the CEO and for now, former CEO of XL saying we can’t do this, and when I read this, I’m saying he’s saying nuclear energy without saying nuclear energy. But nuclear energy you’re saying was was prevented prohibited from any consideration in any of this discussion? Or had you had you heard that before from from Phalke?

Isaac Orr 28:19
Yeah, yeah. Yes, Ben folk? Yeah, I’ve heard that right. But the current leadership at Excel isn’t really interested in lifting the nuclear moratorium, like Xcel Energy has a lot of influence at the Capitol. And if they wanted to lift the moratorium, they could put some resources toward that, and they kind of don’t care right now in it. That’s not their that’s not their battle? Well, no, it’s not their battle plus, like, you know, if I were Xcel Energy, I would basically be doing the same thing they are right, I would be building as much wind, solar and whatever else kind of harebrained scheme that the public utilities commission would allow me to build. And then eventually, I understand that I’m going to have to have a come to Jesus moment where I need to build new nuclear power plants. But in the meantime, the money is really good right now building stuff that doesn’t work very well. So that’s wind and solar with a new natural gas plant that I need in order to, you know, replace the capacity lost from retiring the coal plants, you know, decades before the end of the useful lifetime. So, you know, they’re playing the game, and you know, I hate the player extra. I don’t hate the player necessarily. I hate the game is really frustrating when it seems like the player is trying to, you know, spend the money that they have the ratepayers money, frankly, to change the rules of the game in their favor.

Robert Bryce 29:41
Well, it reminds me that the center of the American experiment a few years ago published a piece that was co authored by my friend Steve Hayward, and pointing out that as Minnesota adopted more renewables rates went up dramatically over what they would have been otherwise. Are you familiar with that report? Can you recount that or was that before your time?

Isaac Orr 30:00
And that was before my time. But that was the high cost of failure. That was really American experiments first foray into the energy energy debate here. And yeah, so Minnesota used to be a very low cost, source of electric or state for electricity. Our prices were 20%, below the national average. And now they’re above the national average. Right? So, you know, it used to be called northern states power company before it was Xcel Energy. And I think that when the company was operated by engineers, and people that were involved with running the grid, they did a really good job of keeping costs low and reliability high. But over the years, the new leadership or their accountants and their lawyers, and they’re looking for ways to maximize shareholder value. So that kind of that ethos of returning maximum value to the ratepayer, because that’s what the point of a public utility is, has been lost. And you know, now it’s, they’re more they’re more interested in the investor owned portion of the investor owned utility than the utility.

Robert Bryce 31:09
Well, there’s one other Yeah, I liked the way you put that. But as I remember, Steve talked about and his co author, I don’t remember at the time, but they, they really did spell that out very well. There’s another in your, in your report, the high cost of 100%, carbon free electricity by 2040, which is on experiment or American On page 21, I just stumbled over this one. As I’m looking at it, I’m finally kind of comprehending what it says that under the wolves proposal by 2040, which again, is now just 16 years away, it is mandating 100,000 megawatts, 100 gigawatts of overall generation capacity. That is 5x. What you have roughly today in Minnesota, I mean, this is one of the things that to me is we’re you know, you’ve got a poker player to lay down hand, right? Well, oh, so you need to you need a tire generation capacity five times the size that you have now, it’s not going to happen it just physically, it can’t happen. And so I look at this, and I think there’s some explain to me how you see this disconnect between what the policymakers are doing and what is actually achievable. In the physical world? I mean, I just don’t, this is the one thing that I keep coming back to that I can’t quite comprehend. How do you see it in terms of this, your own chart here pointing out the massive amount of materials that would be required to make this even happen? Even if you got to halfway there? It’s still a staggering amount, and in a very short amount of time.

Isaac Orr 32:37
Yeah, yeah. So really, what’s going to happen is, we looked at this as a how would you actually run a grid that’s 100% carbon free, not allowing new nuclear power plants and making sure that there was enough electricity for every hour of every day of the year using wind and solar. So we went to the midcontinent, Independent System Operator region one data at the Energy Information Administration. So we have that hourly fluctuation in electricity demand. And then we compare that to the real time wind and solar capacity factor on the miso system at that time, in order to figure out how much capacity we would actually need to meet that demand at 760. Right, right. So that’s how we get these cartoonishly large needs for wind, solar and battery storage. So you know, the the other the folks who supported this talk about racks they talk about, well, you know, on on an annual basis, we will be 100% carbon free even if we need to, you know, sell excess renewables into the miso market and purchase from other states, maybe that have dispatchable power plants online. The Public Utilities Commission in Minnesota is already approving resource plans for XL that have what they call native capacity shortfalls, which basically mean we’ve shut down too many coal plants and we know that we will need to basically buy from the miso market during periods where there’s low wind and solar output on our system. So they they don’t recognize that if you actually wanted to do this in a way that was more physically honest, I think is the way to think about it right? Like if you wanted to actually build enough capacity to power your state and not have some kind of ghoulish demand response assumption baked into your model, then you’re gonna need to build a lot of stuff because this stuff doesn’t work very well sometimes.

Robert Bryce 34:35
Well, is that sometimes is the key word there Right? You know that you have to plan for those troughs or as you say it in the wintertime in particular, where you’re going to have no wind and no solar and you have to then if you’re not going to use gas you have to rely on batteries. Well, I know you said when we started the temperature there’s what 1516 degrees today batteries stink to begin with and they stink double stank during cold weather right so You’re you’ve also got a big issue in terms of the metals and minerals here, just to build the batteries, which I don’t see your real focus in the report here on that part. But this is, again in Minnesota, a very mining, potentially mining rich state. But that’s not happening either.

Isaac Orr 35:17
Yeah, absolutely. So it’s, it’s really too bad that there’s such a disconnect between, you know, the physical world and what these people think is possible. But, you know, there is this very pervasive thought over at the Capitol whenever people are testifying in favor of this is like, we can’t afford not to do this. If we don’t do this, then Minister, they say Minnesota is one of the fastest warming states in the country. And, you know, it’s, there is a single minded focus on climate policy, and they don’t they think that energy policy should be subservient to climate policy. And that is a one way ticket to Germany, frankly. And it’s interesting, because a lot of the people who’ve been talking about how great Germany has been for the last 10 years who are still in the legislature, they don’t even acknowledge that Germany has been is now like an obvious and colossal failure, because they’ve had to, you know, start their coal plants back up. So, you know, it’s kind of an evidence free policy discussion here, Robert. And if you try to bring up these, you know, counterpoints or examples of where this isn’t working, then they just try to say, Oh, well, you don’t care about the fact that the planet is going to die unless we do this. So they kind of write off any cost benefit analysis, because they think the cost is infinity.

Robert Bryce 36:40
Well, and that’s the part where I keep coming. You know, my line is climate change is a concern. It’s not our only concern, and that it has to be balanced. But that’s the part that to me is so remarkable here is that the way you’re describing it, that there was no balance in any of the discussion in the legislature in terms of affordability for low income consumers, reliability overall for the for the grid, and the resilience of the grid, which is critical in a state like Minnesota, where you have harsh weather? A lot of times, right, and yet, is that the source of the disconnect? I mean, you you hit on this what and I love that say that one way ticket to Germany, that this is evidence free, because it’s so much based on a a religious devotion to the idea is that the right word to that of catastrophic climate change will will punish us all unless we do this, unless we pass this bill.

Isaac Orr 37:36
Yeah, it’s such a first world problem, Robert, or at least it’s a first world concern. It’s the you know, the most affluent people in the state are the ones who are the most concerned about this, right? Because you’ve got a lot of other people who are just worried about putting food on the table. And, you know, unfortunately, it’s going to be those folks who are the most harmed by this proposal. Because if you already have the ability to drive a Tesla and plug it in and pay that, Oh, sure. You think that you’re saving the world, but like, the low income family in rural Minnesota that is already struggling to pay their electric bills, like the family I grew up in, in Wisconsin, like they’re gonna feel it, it’s going to be the other interesting thing is they talk about, oh, well, we need to do this for, you know, racial equity and climate justice, because these, you know, black and brown communities are the ones who are going to be the most impacted by climate change. But these are also going to be the people who are most impacted by this climate policy, because they can’t afford higher electric rates either. So there’s a lot of like, talk that basically, they tell themselves the stories to make themselves feel better about the fact that they will be harming these demographics, but it’s because they care so much about them that they need to do it. So

Robert Bryce 38:50
well, I want to interrupt here because I’m looking at fresh energy. I wasn’t I didn’t know about them. And I’m spending a lot of time on GuideStar lately looking at nonprofit groups, right. So their gross receipts, which is GuideStar is figure for their how they describe revenue, in the most recent year, 8.2 million $8.3 million. But to your point there, this is why I want to interrupt that they said on their website, they are rather on GuideStar with their mission statement says shape and drive bold policy solutions to achieve equitable carbon neutral economies. Just prosperous, resilient future blah, blah, blah, reducing disparities protect consumers, and both process and outcome fresh energy will work to actively engage all communities, including black indigenous people of color, all genders, rural, LGBTQ plus persons with disabilities to place workers other economically impacted by the transition to clean energy. So I mean, I don’t know anybody that’s been left out there, but that’s a fairly well, I don’t know how would you describe that, that description there?

Isaac Orr 39:53
It’s empty promises of environmental justice. Robert, that’s really the only way that you can look at this. Those folks are are going to, you know, feel the short end of the stick on this. And the other thing that I’d like to kind of talk about here is the reliability impacts that this would have on Minnesota’s grid. Kind of getting back to our study. So

Robert Bryce 40:13
right the the blackout and your your line, the blackout bill. Yeah, the

Isaac Orr 40:17
blackout bill. Let’s do it. So when we were looking at this, you know, I said that we matched the 2021, electricity demand and wind and solar capacity factors, right. And that’s how we got the amount of installed capacity that we needed that 100 gigawatts. But when we look at the electricity, generation of wind and solar, on like, 2019, capacity factor basis, we found that there would be a six hour blackout in January as a result of lower wind and solar capacity factors, like basically draining the storage early. And we always assume that you start the year with full batteries. In 2020, there is an 80 hour wind drought on the miso system where wind is operating below 10% of its installed capacity for 80 straight hours. And for 42 of those hours, it is below one and a half percent. So you can almost have 100 gigawatts of wind on your system. And you’re getting one and a half gigawatts of actual output as a result of that, right. So the the result, there is a 55 hour straight capacity shortfall at the end of January, based on our modeling. And you know, I understand that that would get rolled throughout the entire miso footprint, right. So it’s interesting, because it’s going to be the blue state blackout blackout blues sounded better in my head I on the pronunciation someday. But you have states like Illinois, in Minnesota in just soon to be Michigan most likely, that are enacting these policies that are requiring the premature retirement of their coal plants and their gas plants. And they’re all hoping that they can purchase from the miso market in order to make up for the native capacity shortfalls that they’re putting into their, you know, state electric grids. Right. So this is the same policy as California, though,

Robert Bryce 42:11
right? Same policy, is the same policy as Germany rely on imports. Oh, my neighbor is going to do this for me. Well, your neighbor may be screwed to right. And this was the big, the big, what should be the big takeaway from the California blackouts was that when they were having shortages, their neighbors didn’t have any electricity to ship to them at that time, either. And I mean, Europe, as you say, This is what was the one way ticket to Germany? This is the German model that is being copied here, or am I missing something?

Isaac Orr 42:41
No, that’s exactly yeah, they just don’t realize that that is, you know, not a road to salvation at this point. You know, the problem with California style energy policy is that you will eventually run out of somebody else’s electricity. And

Robert Bryce 42:56
to paraphrase Margaret Thatcher, right, exactly,

Isaac Orr 42:59
exactly. So, yeah, and even so and the other thing I’d like to kind of hit on with your listeners, because I think there’ll be interested in it from our report is we want to kind of change the narrative when it comes to the levelized cost of energy. Right. So the renewable energy groups, whether that’s Lazard or name one, right, they always say, well, wind and solar are the lowest cost sources of electricity on the system. And, you know, oftentimes they’re using, they’re citing subsidized cost of electricity. And they’re never looking at things like additional transmission costs or property taxes that go up because you have more property to tax additional utility profits whenever you’re shutting down or depreciating coal asset and you’re going to try and replace it with a brand new wind turbine, the utility is going to get their cut. And not only that, but if you need to build 100,000 megawatts of capacity in order to meet your peak demand of, you know, 1300 or 13,500. There’s a lot of overbuilding and curtailment. That happens, right? So in our study, we thought or we calculated that you’d have to curtail 72% of the production from wind and solar in order to make sure that you didn’t overload the grid when wind and solar were working well, but also had enough capacity just kind of available for those wind and solar droughts. And when you take when you incorporate the cost of battery storage over building and curtailment the utility profits etc. You know, the cost of delivering a megawatt hour of electricity or meeting the cost of meeting electricity demand with wind in our analysis was $272 per megawatt hour. And the cost of you know, meeting load with solar was 471. In a lot of that is basically the cost of over building and curtailment dwarfs the rest of the costs in there so you You have this massive overbuilding, and that’s all going to get passed on to the consumer. And when people talk about the levelized cost of energy, they’re looking at this from a they’re basically looking at it in a vacuum of okay, well, what would this one wind facility or one solar facility cost if it operated at its, you know, theoretical potential, which is for a solar panel in Minnesota, maybe 19% capacity factor, or wind, a new wind facility can get up to 49? Sometimes, but it all depends on the year. But, yeah, so if you want to actually be have a reliable system, this largely wind and solar, you have to incorporate and attribute that cost to the intermittent sources that require all the backup. So that’s, that’s essentially what we’ve done. And that graph is controversial. Jesse Jenkins did not care for that graph. But yeah, it he and I went back and forth on Twitter one time, and then he blocked me so but that’s neither here nor there.

Robert Bryce 46:02
Well, yeah, the Twitter battles are a whole lot. You can cut this

Isaac Orr 46:05
part out of the source of

Robert Bryce 46:07
sorts of things we could discuss. But I think it’s critical. I’m looking at your your, your, your conclusion for your report, which again, is on American You wrote, In the end, the idea that we can run our electric grid on wind turbines, solar panels and batteries is a dangerous and unserious one. policymakers who claim that climate change is an existential crisis, I truly believe this, they should immediately support the legalization of nuclear power plants in Minnesota. Otherwise, it is impossible to take them seriously. I’m completely in agreement here. But so why why is this just the democratic playbook that they’re the democratic, the Democrats and the progressives in Minnesota, are just reflexively anti nuclear to explain their opposition to nuclear, can you?

Isaac Orr 46:55
Yeah, so John Marty is the Senator that is the most anti nuclear. And I think that that’s just a an outgrowth of, you know, he’s, he was a Gen Xer, I believe, so you had Ukraine or Chernobyl happen. And I think that he thinks that you can more cheaply, and just as reliably power your grid with wind and solar and battery storage. You know, it’s interesting, one of the arguments against nuclear power is that it takes too long. But, you know, conversely, the people who talk about battery storage, acknowledge that it’s not ready for primetime and that the the technology won’t be available for another 10 years, and then scale it up. Right. So the whole nuclear takes too long is kind of laughable when you think about wood. Mackenzie, a few years ago released a storage analysis that said there’d be 741 gigawatt hours of electricity storage available by 2030. Globally, and that would be about 1% of Minnesota’s annual electricity consumption. So

Robert Bryce 48:08
sorry, I don’t Yeah, that’s okay. Looking at your hearing that I’m hearing and I’m looking for my damn phone here. Anyway. Sorry. I didn’t think that was going to but nevertheless, yeah, but but this reflexive anti nuclear this has been the reflexive focus of the Democratic Party for for decades, right, that this is a we just can’t do it. Right. It takes too long cost too much these these same things. But is there any is there in I know, you know, our friend Eric Meyer is based in Minneapolis with generation atomic, is there any countervailing force in Minnesota that would be pushing for this change in policy on nuclear energy? Or is going to remain the same as long as the Democrats control the House, the Senate and the governorship?

Isaac Orr 48:53
Yeah, I think Eric’s trying, right. He’s setting up meetings with legislators over there. Because, you know, Eric’s progressive guy, he and I don’t agree on much besides nuclear power, doesn’t mean he’s not my friend. Right. But, you know, more power to him, I hope that he can kind of change the, the mindset over there. But, you know, I don’t necessarily see that happening so long as we have, you know, progressive control of the legislature, and maybe that’s just my own personal biases. You know, I’m not really inclined to believe that they’re all that interested in decarbonisation. If they were then nuclear is the obvious answer. So, you know, obviously, honestly, I think it’s more about political patronage and paying back the people that support them. So, you know, there’s another group called the clean grid Alliance. So basically, they’re a trade association of wind and solar developers, you know, these people write checks to candidates and, you know, there isn’t a nuclear industry that’s doing that as far as I can tell. So if you’re going to be, you know, paying back donors with policy, then why would you? Why would you allow the one source of carbon free power that’s available and scalable when that’s not your political constituency? Right. That’s your political my sins

Robert Bryce 50:19
that aren’t aren’t going to make any money off of that, either. So there’s no, I think that I think I think that’s right. And you we think that that clean grid Alliance, I’ve looked at them as well. But fresh energy is a different one, which is they’re based in St. Paul, with, again, eight an $8 million budget, which is a sizable budget for a single state opt a group like this, and I’m just looking at their, you know, the number of people who are on their team. I mean, we’re talking about what 510 1520 25 I mean, these these groups are well staffed. I mean, compared to the senator, the American experiment, I don’t think your budget isn’t even that large, if I recall directly from looking at you on GuideStar. The so you’re out money, you’re outgunned. And there’s no one that is saying, what about the grid? What about resilience, reliability, affordability? Because that’s not for these interest groups? That’s not their concern. Their concern is getting more renewable stuff built? Is that a fair way to think about it?

Isaac Orr 51:21
Yep, Yep, absolutely. But fortunately, we’re not out truth, Robert, and we will win eventually. But it’s gonna have to probably get pretty painful before that happens.

Robert Bryce 51:32
unfortunate, but I fear You’re right. So we’ve been talking for nearly an hour. And so I don’t want to keep you longer than that. My guest is Isaac or he is a policy fellow at the center of the American experiment. You can follow him on Twitter at the fracking guy. Or you can find his report that he wrote with his colleagues, Mitch rolling and John feelin the high cost of 100% carbon free electricity by 2040 on the American website. You know, Isaac always asked my guests a couple of questions. What are you reading? What’s the what are you one of the books that are on top of your pile these days?

Isaac Orr 52:07
Sure. So our good friend Emmett Penney, mutual friend suggested revival of a nation. And basically, that’s all about the history of the US from reconstruction through the Gilded Age, which is something that I’ve always been interested in learning more about, don’t really remember that from our US history classes in high school, I don’t even know if we covered it really, we’d probably watch a movie about why Andrew Carnegie was mean. And that was the the gist of it. But other than that, I’ve been just doing a lot of research for new projects that we’re working on. So a lot of research on heat pumps, basically trying to see what the possibilities are for decarbonizing home heating and cold weather climates. And, you know, if we thought that building 100 gigawatts of wind and solar and battery storage to replace the current coal and natural gas on the grid, is wackadoo. Trying to replace the amount of natural gas heat that we use for home heating in the state of Minnesota or Colorado, where we’re doing it is even crazier. So we can talk about that some other time. But the the electrify everything is rapidly running into the, you know, reliability problems that we’re having on the grid. So I don’t think that we’re going to be electrifying much of anything, based on the research that I’ve been doing. So that’s that’s really where most of my reading has been over the last few weeks or a month or so.

Robert Bryce 53:33
But I’d like to yeah, I’d like to talk further about that. Because this this move this effort, the the amount of energy that’s delivered by the gas grid, during the coldest days of winter is far greater than the amount of energy that’s delivered by the grid, the electric grid during the hottest days of summer. And this is something that is just not understood that the the amount of new generation capacity, the amount of load that will be put on the grid into order to deliver electrical energy for home heating, industrial heating, commercial heating is just staggering. So yeah, I’m very interested in that. So I’ll look forward to talking about that another day. And our final question, we’re a little bit short of an hour. But I want to end with this one, as always, Isaac, what gives you hope?

Isaac Orr 54:14
Well, I think it’s just that there’s a lot more people interested in this topic than there were three or four years ago, I get calls a lot like, Hey, can you talk to this group or that group? So I think people are starting to understand that we are we are digging ourselves a reliability hole. And the first thing we need to do is stop digging, or we’re in a reliability hole and we need to stop digging. So that’s that’s ultimately I think, what what gives me hope I, I worry that we’ve already shut down too many coal plants to avert the worst of what we’re going to start experiencing. I mean, I think the blackouts down south are kind of a testament to that we’ve, you know, we’ve gone all in on the fatal Trifecta and until southern states start winterizing, in their natural gas facilities, the way that we do up here in the Great White North then we’re going to have supply problems especially during during winter months when electricity demand peaks for heat pumps and resistance heat. So yeah, I think that the the hopeful thing is more people care about this now and more people will care about it as the situation deteriorates, so, yeah.

Robert Bryce 55:26
Well, that’s a good place to stop then. My guest has been my friend Isaac or he’s a Policy Fellow at the center of the American experiment. As I said, you can follow him on Twitter at the fracking guy or find him in his work at American Isaac Always a pleasure catching up with you and great work on this stuff. It’s sobering what is happening in Minnesota but unfortunate, I think sign of the times in terms of political correctness around electricity or energy and power system. So thanks for coming back on the podcast.

Isaac Orr 55:58
Hey, anytime, Robert.

Robert Bryce 55:59
And all you in podcast land. Tune in for the next episode of the power hungry podcast if you have a chance are so inclined to give us a 23456 12 star rating on your favorite podcast outlet. And until the next episode. See ya!

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