False Utopia
How Uruguay’s renewable energy “miracle” is an exception that proves many rules.
“No one is happy but by comparison.” – Thomas Shadwell
In February, author Francis Menton of the blog Manhattan Contrarian published a brilliant post with the self-explanatory title “We Must Demand A Demonstration Project Of A Mainly Renewables-Based Electrical Grid.” Menton has been writing persuasively for years that an electricity grid powered exclusively by solar and wind would require a debilitating level of backup storage capacity to avoid rolling blackouts, and wherever intermittent renewables have achieved significant market penetration in the developed world, electricity prices have necessarily soared. Commenting on claims to the contrary made by President Biden during his State of the Union speech, Menton correctly framed the issue (emphasis added throughout):
“It’s so spectacularly contrary to reality that it doesn’t nearly do it justice to call it just a ‘lie.’ In Germany and the UK, energy transition fantasies have led to electricity bills three times and more the U.S. average, and continuing to increase, and millions of ratepayers thrown into energy poverty. It doesn’t take a genius to figure out why the costs explode. They can build thousands of wind turbines and solar panels, but they can’t get rid of any of the dispatchable power plants because they are all needed for backup. So now they are paying for two duplicative systems. Then they must pay the dispatchable plants enough to cover their capital costs at half time usage. Then they must buy the fossil fuels for backup on spot markets where production has been suppressed by, for example, banning fracking.”
Menton goes on to propose an incisively simple demonstration project. Power a small city with nothing more than wind, solar, and whatever storage solution is available in the market today—like batteries, ammonia, or hydrogen—and evaluate how reliably and cost-efficiently the lights are kept on. Central planners have instead committed to spending trillions pursuing this utopian outcome without first piloting the scenario on any reasonable scale—a shortsightedness that will eventually be viewed as a catastrophic blunder of historic proportions.
Last week, an astute Doomberg Pro subscriber brought to our attention a claim of one such demonstration project circulating among renewable energy enthusiasts. As reported, an entire country is running almost exclusively on renewable energy and was able to kick its fossil fuels habit in less than a decade! A recent article posted to the World Economic Forum’s website gives the broad strokes:
“Uruguay is the smallest Spanish-speaking country in South America, known for its impressive coastline, high standard of living, low poverty rates and a football team that tends to punch above its weight. It’s also one of the most sustainable countries in the world, running on 98% renewable electricity, according to the US International Trade Administration.
It has been a rapid and profitable transition. In 2007, the country was still using fossil fuels for a third of its energy generation, the World Resources Institute reported. Now, renewable energy is helping to cut more than half a billion dollars from the country’s annual budget.”
Sounds impressive!
From the WEF, it was just a short jump and skip over to The New York Times where its Magazine publication featured an extensive report of the transformation. In 2008, with oil reaching all-time highs and the financial crisis just beginning to unfold, theoretical physicist Ramón Méndez was tapped by Uruguay’s president to completely redesign the country’s grid. To the environmental left, a generational hero was born:
“After manufacturing costs for renewables dropped within competitive range of fossil fuels in 2009, their appeal quickly became apparent: Because the costs were fixed — just investment and upkeep — the country could unshackle its energy sector from commodities. ‘Energy is not just one thing,’ Méndez said. ‘You have to look at the basis of the energy system — the physical aspects, social aspects, geopolitical aspects.’ Uruguay’s landscape offered an additional advantage: an abundance of bright and windy ranchland suitable for large installations. In September 2008, just five months after assuming office, Méndez submitted a plan for a countrywide transition to renewable power.”
What exactly transpired in Uruguay? How were they able to create an electricity grid almost exclusively powered by renewable energy? Does Uruguay’s journey nullify everything we think we know about energy, or is the country’s story a little more nuanced than that? Contrary to the mainstream portrayal of the situation, Uruguay proves some rather uncomfortable truths about the green energy narrative. Let’s head to South America and shine a light on a few of them.