Overview
Wind power is empty economics enabled by pernicious public policy. For the financial benefit of a tiny few, it is a rigged game that misappropriates math and science and falsely exploits the well attentions of a naive and trusting public in the name of a greater good. It is neither great nor good.
Without massive government supports forced upon us, with costs borne by the taxpayer, the ratepayer, the sufferer and the environment, it would simply not exist.
To this charge, the wind merchants exclaim "give us time, we will one day be able to stand on our own". But this is a fraudulent claim which can never be made good, short of a fundamental change in the laws of physics.
This dog won't hunt. Ever.
The purpose of this section is to catalog and discuss the bad economics that is wind power.
Table of Contents
11/22/11 - Alternative Energy's Alternate Reality (An excellent read from Forbes Magazine)
11/27/11 - Government Caused Rising Electricity Rates
2/10/12 - THE HIGH COST OF RENEWABLE-ELECTRICITY MANDATES
12/30/12 - Wind farm turbines wear sooner than expected
Contents
11/22/11 - Alternative Energy's Alternate Reality (An excellent read from Forbes Magazine)
Alternative Energy's Alternate Reality (Forbes Magazine)
Image by Getty Images Europe via @daylife
Creating a “green energy” economy may be the most daunting central planning task ever attempted. It entails nothing less than the reengineering of our entire energy infrastructure. And, like all central planning schemes, it is based on a roadmap that eschews real-world experience and sound economics in favor of utopian ideology driven by political connections.
Now the experiment is unraveling, having barely begun. As the parade of government-subsidized failures like Solyndra, Stirling Energy, SpectraWatt, Evergreen Solar, Beacon Power, and others mount, now is a good time to look at how all the pieces of the alternative energy puzzle are supposed to fit together—and what happens when they don’t.
Everyone acknowledges that electricity generated from wind and solar cannot be produced and delivered at prices that compete with coal or gas. However, alternative energy advocates believe that someday the cost curves will cross, and that government subsidies will accelerate that day’s arrival.
For this to come true, multiple problems have to be solved before taxpayers run out of money or patience. Along the way, the alternative energy industry has to avoid getting sidetracked into the wrong technologies, as this will delay the eagerly awaited carbon-free future.
First, technology has to be invented that can deliver unprecedented levels of efficiency in the conversion of low energy-density sources like wind and solar into electricity suitable for transmission over the grid.
Second, the prices of fossil fuels have to rise, either because reserves become depleted or through the passage of regulatory encumbrances, such as a massive carbon tax.
Third, new techniques need to be developed to store electricity produced only while the sun shines or the wind blows, allowing that stored energy to be delivered later, when it is actually needed.
Fourth, massive transmission system upgrades need to occur to transport electricity from the wind and solar farms where it is produced to the urban areas where it is consumed.
Finally, unknown problems that crop up when immature technologies are brought to market have to be identified and resolved—from the scarcity of critical materials never before consumed in large quantities to the siting of massive structures that disturb the view of influential public figures. And, of course, after decades trying to protect wildlife from oil spills and other calamities, we must avert our eyes as windmills annually massacre millions of birds, many of them supposedly protected as endangered species.
Failure to solve any of these problems can doom the whole enterprise, stranding investments. Picking winners and losers in this interconnected risk management puzzle is like playing ten games of roulette simultaneously—you can only win if every bet comes in. Yet this has not dissuaded the Department of Energy from smacking your money down. So, how is our Nobel Prize-winning high roller doing?
Conversion efficiency is, indeed, climbing—very slowly. Under unsubsidized conditions, wind and solar would be nurtured in niche markets that fossil fuels cannot satisfy. In time, improvements might expand the market beyond those niches.
But when government subsidies are used to prematurely scale up technologies that make no economic sense, these early experiments become frozen in amber. Speculative investments counting on those subsidies fail. Solyndra was one such failure. Loss-making operations at scale can only be sustained while the mandates and subsidies last. Take away that expensive government support and the businesses crash.
Meanwhile, mature technologies are not standing still. Thanks to fracking and horizontal drilling, proven reserves of gas and oil are soaring, holding fossil fuel prices in check. Even as the Obama administration throws regulatory sand into the gears to slow these developments, newly accessible oil and gas isn’t going anywhere. Sooner or later, it will be pumped out, delaying the day at which the cost curves cross.
Attempts to store enough electricity to power the grid predate current environmental fashion. The motivation has been to reduce the cost of running expensive peak-load generators. However, the storage problem has not yet been solved because the physics are very, very hard. Dozens of ideas have been tried and found wanting, including flywheels, compressed air, pumping water uphill, and mammoth ultracapacitors. And if a practical technique is ever found, its primary economic benefit will not come from enabling windmills and solar farms, but from allowing the expansion of base-load fossil fuel generators, making it possible to reduce the fleet of peak-load facilities.
Then there is the upgrade of transmission lines. Political pressure can be used to force regulated transmission companies to agree to install new high voltage lines. But imagine how long the permitting and construction process will take when company executives are as loath to make these malinvestments as NIMBY-objecting residents are to have towers erected on or even on sight of their land.
The likelihood that all of these problems will be solved simultaneously before the political winds shift is vanishingly small. As we enter an election year, it is easy to see why the venture capital community is rapidly abandoning early-stage alternative energy investments, shifting their last bets to late stage deals, hoping to cash out before the party is over.
No one knows when the final chapter in this saga will be written, but we can be sure it’ll make a fine addition to a book describing the folly of central planning.
http://www.forbes.com/sites/billfrezza/2011/11/22/alternative-energys-alternate-reality/
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11/27/11 - Government Caused Rising Electricity Rates
November 27, 2011
Paying the Rates Obama Demands
Electricity rates now depend more on public policy and regulatory decisions than on actual costs.
Based on a newly released report from Oliver Wyman, a leading global management consulting firm, “There is a growing need to increase electricity prices. These rate increases are largely being driven by environmental, regulatory, and security requirements.” And they are adding to “financial strain at the worst possible moment.”
The report, designed to help utility companies deal with customer wrath, states that “the increases have been the most significant in the residential segment”—where they grew more quickly than other sectors. Despite declining pricing on some fuels, such as natural gas, electricity rates have risen 2.7% per year with some regions experiencing average price increases of 5.1% annually. In contrast, the consumer price index—excluding food and energy—rose by 1.7%.
Residential customers experiencing the highest increases, and/or potential increases, are those who are heavily dependent on coal-fueled generation, as required retrofits cannot economically meet existing environmental requirements—resulting in the proposed retirement of older coal-fueled plants. Existing and proposed EPA rules are having a significant impact on rates—with the vast majority of compliance costs falling on residents. The report states: “If these are enacted and enforced, the Federal Energy Regulatory Commission staff has informally estimated that 8% of our electric generation capacity, representing 81 GW of the nation’s generating capacity, will need to be retired.”
Lisa Jackson, EPA Administrator, was recently asked about the mass retirements of coal-fueled power plants as a result of EPA regulations. While they do not technically require shutting down any plant, the rules are such that plants cannot be operated economically—but Jackson doesn’t see that as her problem. “I can’t say what a business will decide to do. Some businesses are investing in nuclear, some are looking at natural gas. There are states that are leading the way on solar or wind.”
Jackson’s comment, plus the Department of Energy’s loan guarantees, makes clear that the only correct path is wind and solar. But why?
Because most states have renewable portfolio standards (or renewable energy standards) that require power companies to produce a set percentage of their electricity from sources such as wind and solar. These renewable sources, however, increase electricity prices, use more land, and have other personal impacts.
Increasing Prices
A recent article in the Financial Times quotes Steve Sawyer of the Global Wind Energy Council. He said, “In areas of strong wind and plentiful land, such as west Texas or Colorado, wind power could be cheaper than fossil-fuel generation even without subsidies.” Yes, it “could” be—if the public policy and regulatory decisions keep driving up the price of electricity generated from traditional sources. But currently, renewable energy is clearly more expensive.
A few weeks ago, I wrote about the shenanigans the legislature went through in Rhode Island to push an off-shore wind farm—even though the Public Utility Commission declared that it was “commercially unreasonable.” That story made clear that renewable electricity, despite what proponents say, is more expensive. In short, earlier this year, Rhode Island residents were paying 9.4 cents per khw. However, due to a drop in natural gas prices, in March the Public Utility Commission approved a 26% ratedecrease, dropping rates from 9.4 cents per kwh to 6.9. By comparison, the contract for the wind-generated electricity started at 24.4 cents per kwh and includes a guaranteed 3.5% price increase bringing the wind-generated electricity to 47 cents per kwh in twenty years—making the wind-generated electricity roughly 4-8 times more expensive than the natural gas-fueled electricity.
While disposable income for most Americans has shrunk, rules and regulations—not market forces—have driven the price of electricity up, increasing energy’s share of people’s disposable income by 12%.
Land Use
As Lisa Jackson proudly stated, “There are states that are leading the way on solar or wind.” If she has her way, and utilities need to shut down their coal-fueled power plants and replace them with renewable facilities, we know the costs will be considerably higher—which some believe to be a worthwhile trade-off—but, what will that really look like?
In New Mexico, in order to meet the state’s Renewable Portfolio Standard, the primary utility company, PNM, is in the process of installing five major solar arrays around the state. Each of these industrial solar parks occupy fifty acres and have a capacity factor of one megawatt—or enough electricity for 1200 “average” homes.
The San Juan Generating Station, one of the state’s coal-fueled power plants targeted by Lisa Jackson’s EPA, consistently cranks out 1482 megawatts—or enough for 1.8 million “average” homes.
Simple math and these real life scenarios, tell us that in order to replace the one coal-fueled power plant (which is built right next to the coal mine that provides an abundant supply) with the planned industrial solar parks would require 1482 of the arrays—which would cover 74,100 acres.
A similar comparison is available for wind. The New Mexico Wind Energy Center provides wind-generated electricity to PNM through 136 wind turbines on 9600 acres—yielding about 50 megawatts of usable power to serve 60,875 homes. To replace the San Juan Generating Station with wind would cover, using the New Mexico Wind Energy Center model, 284,544 acres. However, using the industry average, replacing the San Juan Generating Station with wind turbines would occupy 509,808 acres.
As noted in previous columns, environmentalists are obstructing industrial wind and solar parks due to the massive land use and others fight the instillations due to viewscape pollution.
So public policy and regulatory decisions are making electricity more expensive while requiring massive land use and damaging habitat and degrading the viewscape. But there’s more.
Personal Impacts
Colette read an article on renewable portfolio standards that I’d written earlier this year. Last week she e-mailed me to ask about my comment: “It is not that renewable energy is wrong. There are many cases where wind or solar are the best option.” Following her name, her signature included, “Resident living with the incessant twirling and swooshing from 24 industrial wind turbines.” I e-mailed her. In her response she said, “I took exception to your statement because I believe that in the end things like wind energy are wrong even for those small scale situations where someone wants the visceral satisfaction that they are doing ‘something’ toward their energy usage.”
Colette proceeded to tell me her story of living with four wind turbines within about a half a mile from her backdoor—and 24 within about two miles from her farm and home.
Back in 2006, Colette, and other farmers, were approached by a wind-power generation developer and offered the opportunity to “host” the industrial wind turbines. Many of the farmers saw wind as their “new crop to harvest.”
Before signing the developer’s contract, Colette had an attorney review it. She was shocked at the restrictions that would be placed on her own land should she sign the contract—including putting the long-term ownership of her farm in danger. She did more research and found myriad reasons to fight the industrial wind energy project. She says, “Unfortunately there were forces in local government that were prepared for opposition, and that had already paved the way for development, regardless of community reaction.”
Now, with 24 wind turbines within a few mile radius of her home, Collette says: “It’s not pretty living with these 400-foot behemoths and there are many times the incessant swirling and swooshing has me depressed and angry. The enjoyment of my home and property has been taken away. Other residents are suffering deeply with tinnitus, ear pain, migraines, and sleep disruption. Luckily my symptoms are not as severe and, other than the lack of sleep, I seem to be able to cope. Some neighbors have told me that they have resigned themselves to finding a way to live with the development because there is no hope of changing anything now that the turbines are up and running.”
The personal impacts have been greater than sleep disruption, tinnitus, or migraines. They are more than viewscape degradation or loss of enjoyment of one’s home and property. Reflecting on the multi-year battle, Colette says: it “completely shattered my faith in government and the environmental movement.”
These snapshots are representative of what is going on throughout the western world. Colette is from Canada. In the European Union, according to the Financial Times, “energy bills have become an increasingly acrimonious political issue, and there are signs of similar tensions flaring in the US.”
The Oliver Wyman report states, “While the future outlook for electricity rates is largely dependent upon public policy and regulatory decisions, one fact is clear: substantial capital investments are required by the nation’s utilities to modernize the electric grid and meet proposed environmental requirements.”
However, unlike Colette’s neighbors, we do not have to be resigned to finding ways to live with the current public policy and regulatory decisions as they are not yet fully up and running. Significant impacts on future consumer prices are being debated today. In the midst of an economic war, we should not be arbitrarily raising energy costs. We need to push “legislators and regulators to find constructive solutions to keep rates low for consumers—including deferring or modifying rules and regulations that have significant capital requirements.”
http://finance.townhall.com/columnists/maritanoon/2011/11/27/paying_the_rates_obama_demands
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2/10/12 - THE HIGH COST OF RENEWABLE-ELECTRICITY MANDATES
Energy Policy & the Environment Report
No. 10 February 2012
THE HIGH COST OF RENEWABLE-ELECTRICITY MANDATES
By Robert Bryce, Senior Fellow, Manhattan Institute
EXECUTIVE SUMMARY
Motivated by a desire to reduce carbon emissions, and in the absence of federal action to do so, 29 states (and the District of Columbia and Puerto Rico) have required utility companies to deliver specified minimum amounts of electricity from "renewable" sources, including wind and solar power. California recently adopted the most stringent of these so-called renewable portfolio standards (RPS), requiring 33 percent of its electricity to be renewable by 2020.
Proponents of the RPS plans say that the mandated restrictions will reduce harmful emissions and spur job growth, by stimulating investment in green technologies.Motivated by a desire to reduce carbon emissions, and in the absence of federal action to do so, 29 states (and the District of Columbia and Puerto Rico) have required utility companies to deliver specified minimum amounts of electricity from "renewable" sources, including wind and solar power. California recently adopted the most stringent of these so-called renewable portfolio standards (RPS), requiring 33 percent of its electricity to be renewable by 2020.
But this patchwork of state rules—which now affects the electricity bills of about two-thirds of the U.S. population as well as countless businesses and industrial users—has sprung up in recent years without the benefit of the states fully calculating their costs.
There is growing evidence that the costs may be too high—that the price tag for purchasing renewable energy, and for building new transmission lines to deliver it, may not only outweigh any environmental benefits but may also be detrimental to the economy, costing jobs rather than adding them.
The mandates amount to a "back-end way to put a price on carbon," says one former federal regulator. Put another way, the higher cost of electricity is essentially a de facto carbon-reduction tax, one that is putting a strain on a struggling economy and is falling most heavily, in the way that regressive taxes do, on the least well-off among residential users.
To be sure, the mandates aren't the only reason that electricity costs are rising—increased regulation of coal-fired power plants is also a major factor—and it is difficult to isolate the cost of the renewable mandates without rigorous cost-benefit analysis by the states.
That said, our analysis of available data has revealed a pattern of starkly higher rates in most states with RPS mandates compared with those without mandates. The gap is particularly striking in coal-dependent states—seven such states with RPS mandates saw their rates soar by an average of 54.2 percent between 2001 and 2010, more than twice the average increase experienced by seven other coal-dependent states without mandates.
Our study highlights another pattern as well, of a disconnect between the optimistic estimates by government policymakers of the impact that the mandates will have on rates and the harsh reality of the soaring rates that typically result. In some states, the implementation of mandate levels is proceeding so rapidly that residential and commercial users are being locked into exorbitant rates for many years to come. The experiences of Oregon, California, and Ontario (which is subject to a similar mandate plan) serve as case studies of how rates have spiraled.
A backlash may result that could even imperil the effort to protect the environment. Some of the renewable-energy projects being built in California are so expensive that "people are going to get rate shock," according to Joe Como, acting director of the Division of Ratepayer Advocates, an independent consumer advocacy arm of the California Public Utility Commission. "In the long run," he said recently, the approval of overpriced renewable energy will harm "the states’ efforts to achieve greenhouse gas reductions."
Given that the RPS mandates have not received enough study and that they appear to be posing risks to a fragile economy, the prudent course of action is to put the state programs on hold. Existing mandates should be suspended and new ones blocked pending a thorough cost-benefit analysis to determine responsible levels of renewable electricity. In the meantime, where practical, natural gas, the cleanest conventional fuel as well as the least expensive, could fill any gaps in energy supply.
ABOUT THE AUTHOR
ROBERT BRYCE is a senior fellow at the Manhattan Institute's Center for Energy Policy and the Environment. He has been writing about energy for two decades and his articles have appeared in numerous publications ranging from The Wall Street Journal to The New York Times and the Atlantic Monthly to the Washington Post. Bryce's first book, Pipe Dreams: Greed, Ego, and the Death of Enron, was named one of the best nonfiction books of 2002 by Publishers Weekly. In 2008, he published Gusher of Lies: The Dangerous Delusions of "Energy Independence". A review of Gusher of Lies in The New York Times called Bryce "something of a visionary and perhaps even a revolutionary." His fourth book, Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future, was published in April 2010 by PublicAffairs. The Wall Street Journal called Power Hungry "precisely the kind of journalism we need to hold truth to power." The Washington Times said Bryce's "magnificently unfashionable, superlatively researched new book dares to fly in the face of all current conventional wisdom and cant." Bryce appears regularly on major media outlets including CNN, FOX News, PBS, NPR, and the BBC. He received his B.F.A. from the University of Texas at Austin in 1986.
Read the rest at:
http://www.manhattan-institute.org/html/eper_10.htm
Download a PDF of the full report here:
eper_10.pdf
12/30/13 - Wind farm turbines wear sooner than expected, says study
Britain’s wind farms are wearing out far more rapidly than previously thought, making them more expensive as a result, according to an authoritative new study.
The analysis of almost 3,000 onshore wind turbines — the biggest study of its kind —warns that they will continue to generate electricity effectively for just 12 to 15 years.
The wind energy industry and the Government base all their calculations on turbines enjoying a lifespan of 20 to 25 years.
The study estimates that routine wear and tear will more than double the cost of electricity being produced by wind farms in the next decade.
Older turbines will need to be replaced more quickly than the industry estimates while many more will need to be built onshore if the Government is to meet renewable energy targets by 2020.
The extra cost is likely to be passed on to households, which already pay about £1 billion a year in a consumer subsidy that is added to electricity bills.
The report’s author, Prof Gordon Hughes, an economist at Edinburgh University and a former energy adviser to the World Bank, discovered that the “load factor” — the efficiency rating of a turbine based on the percentage of electricity it actually produces compared with its theoretical maximum — is reduced from 24 per cent in the first 12 months of operation to just 11 per cent after 15 years.
The decline in the output of offshore wind farms, based on a study of Danish wind farms, appears even more dramatic. The load factor for turbines built on platforms in the sea is reduced from 39 per cent to 15 per cent after 10 years.
Prof Hughes said in his conclusion: “Adjusted for age and wind availability, the overall performance of wind farms in the UK has deteriorated markedly since the beginning of the century.
“In addition, larger wind farms have systematically worse performance than smaller wind farms.”
The study also looked at onshore turbines in Denmark and discovered that their decline was much less dramatic even though its wind farms tended to be older.
Prof Hughes said that may be due to Danish turbines being smaller than British ones and possibly better maintained.
He said: “I strongly believe the bigger turbines are proving more difficult to manage and more likely to interfere with one another.
"British turbines have got bigger and wind farms have got bigger and they are creating turbulence which puts more stress on them.
"It is this stress that causes the breakdowns and maintenance requirements that is underlying the problem in performance that I have been seeing.”
Prof Hughes examined the output of 282 wind farms —about 3,000 turbines in total — in the UK and a further 823 onshore wind farms and 30 offshore wind farms in Denmark.
The report, published last week by the Renewable Energy Foundation (REF), a think tank that has campaigned against wind farms, will give ammunition to sceptics, especially within the Conservative Party, who believe the cost of subsidies to the wind industry is far too high and that the growing number of turbines are blighting the countryside.
Dr John Constable, the director of REF, said: “This study confirms suspicions that decades of generous subsidies to the wind industry have failed to encourage the innovation needed to make the sector competitive.
“Bluntly, wind turbines onshore and offshore still cost too much and wear out far too quickly to offer the developing world a realistic alternative to coal.”
Prof Hughes said his analysis had uncovered a “hidden” truth that was not even known to the industry. His report was sent to an independent statistician at University College London who confirmed its findings.
The report has been disputed by the wind farm industry. It points out that the consumer subsidy is paid only when turbines produce electricity, meaning there is a strong incentive for wind farms to be properly maintained to protect them from wear and tear.
Dr Gordon Edge, dthe irector of policy at RenewableUK, the body that represents Britain’s wind farm industry, said: “Wind farm developers only earn money for the clean electricity they actually generate, so it’s very much in their interests to make sure that their turbines are maintained… to an optimum level, which includes upgrading as the technology improves.
“Better turbines are being developed all the time, so it’s absurd to focus purely on the past as this report does, and pretend that that’s the way things are going to be in the future.”
http://www.telegraph.co.uk/earth/energy/windpower/9770837/Wind-farm-turbines-wear-sooner-than-expected-says-study.html
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