ENERGY EFFICIENCY FIRST, RENEWABLES LATER

The usual custom among energy systems analysts is to make projections regarding future energy consumption and work back from those projections to what is required to meet them. Following business-as-usual practices, Brussels projects a doubling of Europe’s energy consumption by 2050, and that 60 - 80% of the energy generation in 2050 will be renewable, but likely not CO2-free.

http://ec.europa.eu/energy/energy2020/roadmap/doc/com_2011_8852_en.pdf

 

To produce most of the projected doubling of energy consumption by 2050, just imagine a Europe (or a US) covered with:

 

- Several thousand square miles of highly visible solar panels.

- Several hundred thousand, 500 ft high, highly visible, noise-making wind turbines,

- Highly visible transmission lines on tens of thousands up to 135-ft tall steel structures, etc.

 

More of Europe will look like New Jersey in the US. Will tourists still want to come? Will people be happy with all their energy at the expense of their quality of life? Last time I was in the Netherlands, I could not believe all the changes that had taken place. Almost nothing was untouched by "modernity' during the past 50 years.

 

Would it not be better to project near-zero GDP growth, near-zero population growth, and a 50% reduction of energy intensity, Btu/$ of GDP, by 2050 and work back from THOSE objectives to what is required to meet them? Put the horse before the cart?

 

NOTE: A nation’s GDP consists of a mix of energy consuming activities. Near-zero GDP growth implies changing the energy source mix while keeping GDP constant. The additional goal of reducing energy intensity by 50% by 2050 is meant to be due to changes of the mix and increased energy efficiency.

 

An economically viable and environmentally beneficial measure to reduce CO2 for the US would be increased energy efficiency. A 50 - 60% reduction in Btu/$ of GDP is feasible with existing technologies. Such a reduction would place the US on par with most European nations, AND would make the US more energy independent, AND would move the US closer to the 1990 Kyoto CO2 emissions goal.

 

The US has some catching up to do regarding energy efficiency. The energy intensities, Btu/$GDP, of:

 

US

9111

Germany

7396

UK

6145

Switzerland

4901

Denmark

4845

Japan

4519

 

If the US would reduce its energy intensity by 4,000 Btu/$GDP, the US economy would:

 

- Have energy cost savings of 4,000 Btu/$GDP x  $20 trillion GDP x $4/million Btu (natural gas) = $320 billion/yr 

- Need to invest less in new power plants and unsightly transmission and distribution systems 

- Pollute less, emit less CO2, spend less on healthcare 

- Live in more compact communities, have more energy efficient residences, and drive more high mileage vehicles. 

 

There are major side benefits from becoming more energy efficient. People have to put on their thinking caps. It leads to better trained people, technological advances, and better products and services that are more competitive which helps exports, reduces the trade deficit, increases household incomes and tax collections. Energy efficiency is a lifestyle with many rewards.

 

RENEWABLES BENEFITS ARE OVERSTATED

 

Promoters of renewables often overstate its benefits and play down its drawbacks. This swaying of the lay public makes perfect business sense, but often leads legislators, also part of the lay public, to perform “constituent service”, which usually leads to crony-capitalism that benefits the top 1%, and the passing of laws that benefit the renewables oligarchy at the expense of the lay public, whose "benefit" is 1) higher taxes, fees and surcharges, 2) higher electric rates and 3) increased prices of goods and services.

 

Renewable Energy is Expensive: Wind energy on ridgelines of New England costs about 9 c/kWh, heavily subsidized, about 15c/kWh unsubsidized. This compares with New England annual average wholesale prices of 5.0 c/kWh since 2009. Offshore wind energy is at least 2 times more expensive. Here are some examples:

 

Cape Wind: Cape Wind Associates, LLC, plans to build and operate a wind facility on the Outer Continental Shelf offshore of Massachusetts. The wind facility would have a rated capacity of 468 MW consisting of 130 Siemens AG turbines each 3.6 MW, maximum blade height 440 feet, to be arranged in a grid pattern in 25 square miles of Nantucket Sound in federal waters off Cape Cod, Martha’s Vineyard, and Nantucket Island; the lease is for 46 square miles which includes a buffer zone. 

 

The Massachusetts Department of Public Utilities approved a 15-yr power purchase agreement, PPA, between the utility National Grid and Cape Wind Associates, LLC. National Grid agreed to buy 50% of the wind facility’s power starting at $0.187/kWh in 2013 (base year), escalating at 3.5%/yr which means the 2028 price to the utility will be $0.313/kWh. The project is currently trying to sell the other 50% of its power so financing can proceed; so far no takers.

 

A household using 618 kWh/month will see an average wind power surcharge of about $1.50 on its monthly electric bill over the 15 year life of the contract; if the other 50% of power is sold on the same basis, it may add another $1.50 to that monthly bill.

Power production is estimated at 468 MW x 8,760 hr/yr x CF 0.39 = 1.6 GWh/yr. 

The capital cost is estimated at $2.0 billion, or $4,274/kW. Federal subsidies would be 30% as a grant.

 

Block Island Offshore Wind Project: The 28.4 MW Block Island Offshore Wind Project has a 20-yr PPA starting at $0.235/kWh in 2007 (base year), escalating at 3.5%/yr which means the 2027 price to the utility will be $0.468/kWh. A State of Rhode Island suit is pending to overturn the contract; the aim is to negotiate to obtain a lower price.

Power production is estimated at 28.4 MW x 8,760 hr/yr x CF 0.39 = 0.097 GWh/yr.

Capital cost is estimated at $121 million, or $4,274/kW. Federal subsidies would be 30% as a grant. 

 

Delaware Offshore Wind Project: The 200 MW Delaware Offshore Wind Project has a 25-year PPA starting at $0.0999/kWh in 2007 (base year), escalating at 2.5%/yr which means the 2032 price to the utility will be $0.185/kWh.

Power production is estimated at 200 MW x 8,760 hr/yr x CF 0.39 = 0.68 GWh/yr.

Capital cost is estimated at $855 million, or $4,274/kW. Federal subsidies would be 30% as a grant. 

 

Net Jobs From Renewables is a Hoax: RE promoters and politicians often tout job creation by RE projects, but do not mention the jobs lost in others sectors of the economy. 

 

Economists have used standard input-output analysis programs for at least 40 years to determine the plusses and minuses of various economic activities. Numerous studies, using such economic analysis programs, performed in Spain, Italy, Denmark, England, etc., show for every job created in the RE sector, about 2 to 5 times jobs are destroyed in the other sectors. 

 

Also, for every 3 green jobs created in the private sector, 1 job is created in government, but, as a general rule, for every job created in government about 2 jobs are destroyed in the private sector, largely due to added economic inefficiencies; no one would claim government is more efficient than the private sector. In tabular format:

 

Total job gain from RE subsidies = 3 in RE sectors + 1 in government = 4.

Total job loss in private sector due to RE subsidies = 3 times (2 to 5), due to 3 RE jobs created + 2, due to 1 government job created = 8 to 17

Net job LOSS due to RE subsidies = (loss 8 to 17) - (gain 4) = 4 to 13 

 

Such job “creation” is unsustainable. Whether these government jobs are good or bad, needed or not needed, is irrelevant.

http://vtdigger.org/2012/03/27/digger-tidbits-vermont-ranks-no-1-in...

 

Note: This is not the case with increased energy efficiency subsidies. They create jobs in the EE sector, but also create a net increase of jobs in the other sectors, because the reduction of energy costs enables more spending on other goods and services.

 

http://en.wikipedia.org/wiki/Input-output_model#cite_note-ref-0

http://en.wikipedia.org/wiki/Input-output_model

http://www.texaspolicy.com/pdf/2012-02-PP03-LearningFromOthersMista...;

http://conservativedailynews.com/2011/09/green-jobs-why-wont-obama-...

http://sistertoldjah.com/archives/2011/02/28/study-green-initiative...

http://greatlakeswindtruth.org/breaking-news/117-for-every-green-jo...

http://www.alabamapolicy.org/viewpoints/print.php?id_art=481

http://conservative-outlooks.com/2011/03/12/green-jobs-fruit-of-the...

http://budget.house.gov/News/DocumentSingle.aspx?DocumentID=261226

http://www.aei.org/article/energy-and-the-environment/the-myth-of-g...

 

Example of Job Shifting due to Subsidies: Under the Vermont STANDARD OFFER program it will take about $230 million of scarce funds to build 50 MW of expensive renewables that produce just a little of variable, intermittent and expensive power that will make Vermont less efficient at exactly the time it needs to become more efficient.  

 

The VT-DPS evaluated the program in 2009 and issued a white paper which stated about 35% of the $228.4 million would be supplied by Vermont sources, the rest, mostly equipment by non-Vermont sources, such as wind turbines from Denmark and Spain, PV panels from China, inverters from Germany.

 

There would be spike of job creation during the 1-3 year construction stage (good for vendors), which would flatten to a permanent net gain of 13 full-time jobs (jobs are lost in other sectors) during the operation and maintenance stage. It gets worse.

 

Under the SO program, these projects sell their energy to the grid at 3-5 times annual average grid prices for 20 years; the high-priced energy is “rolled” into a utilities energy mix, resulting in higher electric rates for households and businesses, higher prices of goods and services, fewer jobs, lower living standards.

 

Most of the larger SO projects are owned by the top 1% of households that work with lobbyists, politicians and financial advisers to obtain generous subsidies for their tax-sheltered LLC projects that produce expensive energy at high cost/kWh and avoid CO2 at high costs/lb of CO2; inefficient crony-capitalism under the guise of saving the world from global warming and climate change. This URL was removed by VT-DPS, because it mentioned some inconvenient truths.

http://publicservice.vermont.gov/planning/DPS%20White%20Paper%20Fee...

 

Example of Misuse of Public Funds: Efficiency Vermont is a quasi-government organization financed by about a 10% surcharge on people’s electric bills. Its 2016 budget was about $60 million. However, more than $40 million of the $60 million are expenses for payroll, office, travel, etc., of its 175 person staff, leaving only $20 million to do projects; not an efficient approach.

 

It would be more effective to use the $60 million/yr as DIRECT subsidies to the bottom 90% of households to make their houses (“cash for caulkers”) and their vehicles (“cash for klunkers”) more energy efficient; the lower the household income, the greater the incentives. 

 

It would quickly lead to a surge of renewal of thousands of houses, condos and apartments buildings providing many hundreds of jobs. This renewal would quickly lead to lower fuel bills, lower CO2 emissions, less need for fossil power plants and renewables systems, AND would quickly put money in the pockets of people, which they would quickly spend to stimulate the economy, which would quickly raise revenues to help balance Vermont's budget. Imagine what the above $228.4 million would do if it were used for increased energy efficiency of buildings.

 

Renewables Subsidies Producing Winners and Losers: Financial advisors think the subsidy called Production Tax Credit, PTC, a 2.2 c/kWh government subsidy/donation, is a key element of the package of wind energy subsidies they need to sell wind energy tax shelters to high-income people (the top 1% that already has many such deals to avoid taxes) and corporations.

 

Financial advisors would love to have another tool to sell their wares called National Renewable Portfolio Standard, NRPS. It would require utilities to purchase renewable energy no matter what the cost/kWh, whenever offered. The NRPS would be the ultimate kick in the teeth for households and businesses.

 

Financial advisors have prepared spreadsheets to demonstrate to their potential high-net-worth clients the estimated yearly cash flows of the tax shelter and tax savings. Such spreadsheets are useful to potential clients seeking a second opinion from their tax advisors before taking the nearly risk-free plunge. Some of these clients have to put up 5 to 10 million dollars, or more, to finance $100 million dollar wind turbine projects. The financial advisor makes a good commission. Without the PTC and other subsidies, the spreadsheets do not look so attractive to potential clients and the job of the financial advisor becomes more challenging.

 

After the required number of clients have been signed up for a wind turbine project, an LLC is set up, a 20-year contract is signed with a utility, and the partners of the LLC are all set for the next 20 years. That electric rates will rise faster than they would have without the expensive, variable and intermittent wind energy is not their concern. The Federal Energy Regulatory Commission, FERC, website lists thousands of renewable energy LLCs and their quarterly production.

http://www.ferc.gov/docs-filing/eqr/data/spreadsheet.asp

 

The losers are the federal and state governments because they less tax revenues, the ratepayers paying more for electricity, and for increased prices of goods and services, the environment, and the people and animals living within about a mile of the wind turbines.

 

The winners are the financial advisors (GE, BP, Shell, Goldman-Sachs, BNEF, etc.), the vendors (GE, Vestas, Iberdrola, etc.), the project developers and their LLC partners. They set up PACs and make campaign contributions to legislators, governors, etc., to essentially bribe them to support subsidies, or they may invisibly tie their family and friends into some of the LLCs, at a discount. 

 

We, the People, i.e., the rate paying losers, are finding it frustrating to overcome this circle of power. 

 

Electricity from wind is very high in true cost and very low in true value.

APPENDIX 1

High Electricity Prices for RE in New England: The highly subsidized wholesale prices of wind and solar paid by utilities to producers are much higher than in the rest of the US, because of New England’s mediocre wind and solar conditions.

http://www.windtaskforce.org/profiles/blogs/subsidized-solar-system...

 

Wind and Solar Far From Competitive with Fossil in New England: The Conservation Law Foundation claims renewables are competitive with fossil. Nothing could be further from the truth. Here is a list of NE wholesale prices and Power Purchase Agreement, PPA, prices.

 

NE field-mounted solar is 12 c/kWh; competitively bid

NE rooftop solar is 18 c/kWh, net-metered; GMP adds costs of 3.813 c/kWh, for a total of 21.813 c/kWh

http://www.windtaskforce.org/profiles/blogs/green-mountain-power-co...

NE wind offshore is at least 18 c/kWh

NE wind ridgeline is at least 9 c/kWh

DOMESTIC pipeline gas is 5 c/kWh

Russian and Middle East imported LNG is at least 9 c/kWh

NE nuclear is 4.5 c/kWh

NE hydro is 4 c/kWh; about 10 c/kWh, if Standard Offer in Vermont.

Hydro-Quebec imported hydro is 6 - 7 c/kWh; GMP paid 5.549 c/kWh in 2016, under a recent 20-y contract.

NE annual average wholesale price about 5 c/kWh, unchanged since 2009, courtesy of low-cost gas and nuclear.

 

NOTE: Vineyard Wind, 800 MW, fifteen miles south of Martha’s Vineyard, using 8 or 10 MW turbines, 750 ft tall.

Phase 1 on line in 2021, electricity offered at an average of 8.9 c/kWh over 20 years

Phase 2 offered at an average of 7.9 c/kWh over 20 years

 

https://www.bostonglobe.com/business/2018/08/13/vineyard-wind-offer...

https://www.boem.gov/What-Does-an-Offshore-Wind-Energy-Facility-Loo...

 

NOTE: The NE grid is divided in regions, each with Local Market Prices, LMPs, which vary from 2.5 - 3.5 c/kWh from 10 pm to about 6 pm; slowly increase to about 6 - 7 c/kWh around noon time, when solar is maximal; are about 7 - 8 c/kWh in late afternoon/early evening (peak demand hours), when solar is minimal. Unusual circumstances, such as power plant or transmission line outages, can cause LMPs to increase to 20 - 40 c/kWh, and even higher when such events occur during peak demand hours.

 

NOTE: The above prices would be about 50% higher without the subsidies and even higher without cost shifting. See Appendix.

 

NOTE: Here is an ISO-NE graph, which shows for very few hours during a 13-y period were wholesale prices higher than 6 c/kWh. Those prices are low because of low-cost gas, low-cost nuclear and low-cost hydro. The last four peaks were due to:

 

- Pipeline constraints, aggravated by the misguided recalcitrance of pro-RE Governors of NY and MA

- Pre-mature closings of coal and nuclear plants

- Lack of more robust connections to nearby grids, such as New York and Canada. See URLs.


https://www.iso-ne.com/about/key-stats/markets/

http://truenorthreports.com/rolling-blackouts-are-probably-coming-t...

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Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT (excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010  http://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?"  http://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” http://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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