Dear 'Wall Street Journal': Bill Gates Is Not an Idiot

I love the Wall Street Journal, I really do. I read it every day, all the sections. It's really the only "national" newspaper we have that isn't a joke. The New York Times is still too local and doesn't have enough business news, plus it wears its politics not only on its sleeve, but on both sleeves and on its shirtfront as well. USA Today qualifies in the "joke" category. The Washington Post is a mere ghost of its former self. And I read the Wall Street Journal because by and large the articles are pretty factual and don't seem biased, at least on the surface on the surface.

But every so often, the Journal just can't help itself, and it has to publish something really nutty about energy. For some reason they hate renewable energy, and continue to ignore facts and data and trends that I can easily find just by reading a couple of free digital newsletters. Hey, these guys are professionals, they should be better at this than I am. I just sit here north of San Diego, mostly looking through the palm trees and watching the pelicans fly over the ocean.

An example: on September 22, the Journal published an article entitled "The Biggest Misconceptions People Have About Renewable Energy." The article is made up of comments by experts, with opinions all over the map. The panel was assembled by John Hofmeister, former president of Shell Oil Co, whose entry for biggest misconception is that if you're under 40, you're too stupid or naive or misinformed -- or maybe even lazy; get out of your parents basement and get a job! -- to understand the following not-very-difficult facts. His version of the facts is "renewable energy is intermittent, small scale, too costly and capital intensive to be commercial." And another of the assembled experts, Christine Todd Whitman, former governor of New Jersey, contributes two sentences as her view of "biggest misconception." The second sentence is "Solar power only works when the sun is shining and wind-generated power only works when the wind is blowing; it's not a constant energy source."

Who does her syntax? Doesn't she mean "they're not a constant energy source?" And who exactly is it that has the conception that the sun shines at night and the wind blows all the time? Probably not even the most primitive tribe in the most unreached portion of the Amazon or Papua New Guinea. As for Mr. Hofmeister, given that my company constructed an $800 milllion 256 MW solar plant on 2000 acres of land in El Centro, California, and is selling that power at a competitive price to San Diego Gas & Electric, it's hard to see why he says that renewables are "small scale." Has he never driven past wind farms on the way from LA to Palm Springs? Or even just flown over west Texas and looked down? It's true that there is no single renewable project yet to rival Shell's attempt to drill for oil in the Arctic, which press reports indicate was a failed $7 billion expenditure on one well, now abandoned and written off. This extravagant waste of his shareholders' money may not qualify him as an oil expert, let alone an expert on renewable energy.

There are many, many reports that indicate that Mr. Hofmeister and other critics are a bit off the mark on the issue of cost, not just of their own arctic fantasies, but of renewables in general. And how they compare against traditional power sources -- his concern about not being "commercial."

Remember Three Mile Island? The unfortunate Pennsylvania location in 1979 of what is still the most consequential nuclear accident in US history, although the Russians and the Japanese have since then seized the radioactive trophy for worst global nuclear meltdown from us. The remaining unit of the two unit plant, the unit that was not damaged in the accident and then cleaned up and shut down, is now facing competition in the marketplace from renewables and natural gas. In fact, its owner, Exelon, announced that the plant had failed to win a bid in a recent auction and that it might well need to be shut down.

On the same day another utility, Xcel Energy which owns plants in the Midwest and Colorado, stated that it was moving more quickly to more wind and solar power and less coal in its generating mix in Minnesota than it had originally planned. I have never been to Minnesota but I doubt that it is a solar mecca, although I am ready to stipulate that the wind blows there. The Xcel move was characterized by company officials as "really a business decision about what we think is right for the future." Let us assume that "business decisions" don't generally favor purchasing higher cost inputs compared to lower cost one's for your principal product.

Xcel and Exelon are not alone. Another traditional, large utility, Entergy, announced recently that it will shut down its Pilgrim nuclear plant in Massachusetts, and is considering the same fate for it Fitzpatrick nuclear plant in New York. In both cases the culprit is competitive wholesale power prices.

There is little doubt that the continuing slide in solar panel prices has begun to convince even the doubters that they should relook at their generation plans. A recent report from the Lawrence Berkeley National Laboratory entitled "Utility Scale Solar 2014" concluded that the wholesale price of electricity from these large scale plants was now five cents per KWh, a "record low." Project construction costs have gone down dramatically in the last ten years, and conversion efficiencies, and thus capacity factors have increased. The result is dramatically lower prices for solar kwh.

And if you don't believe "studies" by academics under government contract, then here are real examples: in July, NV Energy in Nevada announced two long-term contracts with reputable, credit-worthy solar companies, one with SunPower for 4.6 cents/Kwh and one with First Solar for 3.87 cents/Kwh. Developers of solar plants who I know well indicate that they're bidding less than four cents in auctions -- and losing. Bear in mind that Warren Buffet owns NV Energy, and he is not generally known as a left-wing renewables nut.

Probably the most interesting recent "confession" from a utility comes from the Xcel CEO who in an all-source procurement selected 2.5 cent wind generated electricity over gas plant electricity for 3.2 cents. And gas is trading at Henry Hub for October have been around $2.38 per mmbtu.

So why does the Wall Street Journal run an article in which the subhead reads "Bill Gates recently noted that the cost of decarbonization using today's technology is 'beyond astronomical.'"? Why indeed, I asked myself.

Then in reading the article it turns out that the Journal was taking from another article, this one in the Financial Times, and very selectively quoting Mr. Gates. The FT article was titled "Gates to double renewable energy investments." Not quite what the Journal carelessly implied. Bad journalism and egregious taking quotes out of context -- we expect better of the Journal.

In fairness, one should point out that the editors of the Journal did finally run a balanced and accurate article on renewables, perhaps with gritted teeth, but run it they did. It was written by one of their staffers, Keith Johnson, and was entitled "Six Myths About Renewable Energy" and took on the "too expensive" and "too small to matter" shibboleths accurately and with real data. It also debunked the unfortunate "millions of green jobs" myth, about which the renewable industry itself has not been honest.

This article was nicely done, up to date and generally accurate, and I do hope that Mr. Johnson still has his job at the newspaper.

RF Hemphill is a former CEO of a multi-billion dollar global electric power and distribution company and is the author of Stories From The Middle Seat: The Four-Million-Mile Journey to Building a Billion Dollar International Business.