Saturday, December 10, 2016

Why We Need Wind Energy in a Major Way




Now that the The Donald & Co. has successfully seized control of the US government, two of the 3 branches of the US government are now completely in Republican control (Presidential, Senate/House in congress). And it looks like Trevor Noah’s observation of The Donald as a toddler mind will get magnified something fierce (http://time.com/4585970/trevor-noah-donald-trump-toddler/). As part of this toddler mindset, there is the matter of revenge (if they screw you, you screw them back 10 times as bad). The renewable energy and environmental advocacy community has been very down on The Donald, figuring that he is totally in the tank for pollution based energy companies - notably fracking sourced oil, fracking sourced methane and (supposedly) coal. So payback will get ugly, as evidenced by his cabinet appointees. Science is irrelevant to The Donald and even less so for his proposed head of EPA, eventual Energy Secretary, Commerce Secretary, Attorney General, Health and Human Services, etc. We as a country will soon become a pariah in the civilized world and even the uncivilized world…. but no matter, the evil deed has been done, the die is cast, now it’s time to pay for this combination of nasty, greed and hatred coupled to a petulant frenzy induced by the finest advertising and propaganda campaign via Twitter and Facebook, EVER.......

Odds are, we can forget about coal as much of a factor in anything - annual sales of U.S. coal are less than $25 billion/yr (in contrast, sales of ethanol and biodiesel are > $30 billion/yr on a bulk basis). And if you don’t have a lot of coin to bring to the table, there’s just no sense bothering to show up for this hand of really crooked poker - it’s hardly even entertaining to the likes of The Donald. And since new nukes are abysmally expensive and a long term investment (The Donald is strictly short-term oriented), we can forget about those as being a factor in future US electricity production. So electricity generation in the US will be made by existing presently operating coal burners, nukes and gas burners as well as renewables. In The Donald’s view (assuming this even exists with respect to energy), any further new generation will be provided by fracking sourced methane - it’s cheap to install, plants can be rapidly put up and methane producers/marketers are desperate for new customers. As for the money to install these, we in the USA are awash in money (estimated as $2 trillion of private money looking for something - anything - to invest in that will provide ANY kind of profits), so banks, hedge funds and rich investors will be more than willing to do this, especially if they get “back-stopped” by the Federal Government and also can score some ginormous tax avoidance possibilities with such investments.

Those who seem to be in the dumps the most about these developments (it’s a long list) include the small percentage of Americans actively concerned and informed about Global Warming/Climate Change/Climate Weirding. Obviously there will be NO Federal Government policies implemented in the next few years to even modestly try and make this bad situation slightly less worse as was done in the Obama Administration. The Donald’s reign will be characterized by attempts to actually make things worse - to INCREASE the rate at which the atmosphere gets polluted with fossil sourced CO2 and CH4. They will take it as religious dogma that greater rates of atmospheric greenhouse gas pollution per annum equates with greater economic activity in the US, or at least greater profits for the Ngas extraction industries/Ngas consuming entities. Of course, to claim that The Donald’s administration will pursue smart policies is a really stupid thing to do. Odds are, they will rapidly induce a recession which will actually CUT DEMAND for methane and thus collapse methane pricing even more than already exists ….. After all, just a slight decrease in the demand for methane at constant production will take the record inventories (http://ir.eia.gov/ngs/ngs.html), increase them more and trash prices that are already too low to make the profits investors were promised. And since so many methane producers are unable to throttle back production (that is forbidden via the financing deals that were signed), the oversupply will crash prices…..



More than half of US methane produced in the US these days is fracking sourced (43 bcfd) with the Marcellus/Utica zone as the biggest producer (combined these provide 21 billion cubic feet per day of the fracking sourced CH4 now consumed). Essentially none of this is being provided by new wells drilled in the Marcellus (16.8 bcfd), as production is drifting down from the peak  of 17.0 bcfd (March 2016). Nationwide, methane consumption is close to 75 bcfd, so fracking now supplies 57% of US methane. Of the major fracking zones for methane zones (Antrium, Bakken, Woodford, Barnett, Fayetteville, Eagle Ford, Paynesville, Marcellus, Utica), several are in decline. Only the Bakken (no longer flaring it), Marcellus and Utica seem to be holding their own (Woodford = - 14%, Barnett = -40%, Eagle-Ford = -16%, Haynesville = -50%). For example, here is this updated chart of US methane production (presently rising to supply exports!): http://www.eia.gov/dnav/ng/hist/n9070us2m.htm



There are now only 119 drilling rigs prospecting for methane (down from 1600 in 2008/900 in 2010 to 2012) in the US; this is less than 8% of the peak drilling effort in 2008. The reason for this drastically lower drilling rate is low methane prices - especially for one of the major consumption sectors for methane - electricity (now 29% of methane consumption in the US). Those have been in place for roughly the last 7 years, and as a result at least $200 BILLION in losses have occurred - mostly from investors who, as it turned out, were foolish to invest in these drilling ventures. Here is the trend nicely encapsulated into a graph:



and prices for electricity raw material methane (NY Citygate):



According to this source (http://www.artberman.com/world-oil-production-in-balance-u-s-natural-gas-production-way-down/), the best fracked wells need $4/MBtu to justify the investment and average wells need $6/MBtu. At $3/MBtu, that’s the wrong price. And “city gate” pricing in NY City is now both unpredictable AND often too low: http://www.artberman.com/world-oil-production-in-balance-u-s-natural-gas-production-way-down/. So while lots of impressive production rates have come from all this fracking based gas drilling, an absolute dearth of money making has taken place and huge debts are all that there is to show for this effort. That does not sound much like financial  genius type activity, more like “genius” at losing Other People’s Money. However, both bankers/financial services entities and those supplying the tools of the trade have done well for themselves until recently. But even that segment is finally “reaping what they have sowed” - with lots of bankruptcies so far and a lot more to come… (http://oilprice.com/Energy/Energy-General/North-American-Oil-Gas-Bankruptcies-Climb-Beyond-100.html). And for now, with record methane inventories,  more drilling, fracking and methane production will just lead to WORSE business conditions. So anyone counting on that part of the US economy to be a major stimulus is either ignorant or lying or both - such as The Donald…..

So why is it likely that The Donald will induce a recession in the US? It’s all about economic demand and uncertainty related to things like the Affordable Care Act (“Obamacare”). For example, this means that close to 30 million people will have to pay more - in many cases a LOT more - for what passes for health insurance in this country, and so they will start cutting back spending on other things to try and sock away some stash to deal with the future potential costs. This also will cause failures to a number of hospitals - especially in rural or semi-rural regions when they experience significant rises in emergency room visits with no extra added income to compensate them. In addition, insurance companies will lose up to 30 million customers (a lot of it a transfer of money from wealthy people to the Federal Government to Insurance Companies, with about 80% of the money paid to insurance companies going to doctors/nurses/hospitals/drug companies/other health care related entities. All that will have a snowballing result as the economic multiplier from the spending vanishes with that spending. Our economy is already on a fairly delicate balance - much of it financed by debt (cars, housing, student loans). And when debt-holders cannot make their payments and do so at an increasing rate, that spells trouble for banks, which will cause interest rates to rise/credit to be contracted. And credit is money creation….. Another source of worry concerns rent payments, which have skyrocketed in many areas and are still boosted by the fact that when 7 million people lost their houses in The Great Recession, they had to start renting. More renters, same number of rental spaces —> more demand for rental housing = higher rents, especially when few affordable rental housing units have been built.

The gas and oil economic FUBAR for the last several years (oil and gas prices often lower than the cost of production)  also has resulted in close to $80 billion in bankruptcies just this year (and several billion last year). A lot of those who made a killing on The Great Recession or the bail-out used to deal with it bought up billions worth of vacant housing at bargain pricing, which they converted into rental housing. But evidently those investments have not panned out that well, and so those investments are also an economic drag. But rents are already obscenely high, so there is no relief in that area…. Of late, auto and truck sales have started to decline for lack of customers with actual money of good enough credit to buy them, Heck, there is even a thing called “sub-prime auto loans” not to mention bonds that have been sold to amortize the car loans/student loans/rental home loans. Cute.......

As for the effects of massive tax cuts to the super-rich - that will have little effect on overall consumption, as they pretty much have all the stuff they have time to buy/use/abuse. As for investment opportunities in this country…. well, those are also pretty sparse. Adding more investable money to this pool (tax cuts for the rich/tax holidays for corporate “offshore” money) will not lower interest rates (already effectively at or near 0%) and it will not cause business investment/real estate investment to rise, because that is predicated on an actual DEMAND for stuff. But what is lacking is DEMAND. Investment usually follows demand and does not lead it…. As for the vaunted “The Donald Infrastructure” plan, that appears to be just another scam based on tax avoidance. Besides, these investments by private entities would need a money stream over time to pay a profit on this investment. But there is no profit to be had on sewer plants or mass transit systems or non-toll roads....

An area of the American economy that has been doing good of late (and with huge upside of growth potential) has been renewable energy - in particular, biofuels, wind turbines and PVs. But now there is worry that the petroleum interests who now dominate (i.e. purchased their share of The Donald, Inc.) the new administration will be targeting biofuels (sales = $30 billion/yr) because these take away market share from actual petroleum and thus crude oil production/extraction. But that will collapse prices for certain major crops when the demand for these drops even slightly (we had bumper crops of corn and soybeans last year). There is also a well founded fear that The Donald, Inc will attempt to trash the wind turbine biz as much as is possible. This too will be a bad thing for the U.S. “Ag” economy - after all, where else is it legal to net $5,000 to $15,000  from a 1/16 acre parcel of land. But The Donald got dissed big time on a wind turbine matter in Scotland, so obviously American farmers are going to have to pay for that one to a YUGE degree. Yeah, The Donald is quite a piece of work - psychologists and abnormal behavior analysts will have a field day writing papers and debating the results of their research for many generations…..

In the meantime, there are still something like a $30+ billion “pipeline” of wind projects being developed in the US in the next couple of years with the understanding that one of the subsidies that has so far made the wind biz possible in the US - The Production Tax Credit - is going away, starting in 2018 and phasing out completely by 2022. But thanks to the development of Low Wind Speed Turbines such as seen in the picture at the top (presently one of the more popular varieties being installed in the US this year), the electricity production cost from these is often less than can be obtained from a methane burning plant. Texas now has 117 large wind farms and ~ 18 GW of installed capacity, while Iowa now has over 35% of its electricity provided by wind turbines. In Iowa, that could well become 50% wind sourced electricity by 2018 (http://www.govtech.com/fs/Iowa-Passes-Plan-to-Convert-to-100-Percent-Renewable-Energy.html). The Warren Buffet owned utility MidAmerican Energy (Iowa’s major electricity monopoly) now has a goal of 100% wind sourced electricity. So much for increase Ngas or coal consumption, at least in the US midwest…. And to think that’s where The Donald pretty much “swept the tables” in the 2016 US election…

Anyway, The Donald’s ascent to power will mean roughly 4 years of inaction on renewable energy efforts by the US government as he attempts crony capitalism on a truly “bigly” scale. This will include payoffs (mostly legal) to those that helped bring him over the Electoral College finish line - notably fossil fuel producers and marketeers and scammers and promoters. But it is unlikely that he can stop the wind rush in the west and midwest and other parts of the U.S. That wind resource is so huge and the LWST coupled to that are just too enticing. So that means less demand for fossil sourced methane than his backers are hoping for, and even more delayed profitability for the Ngas biz, despite record production. That has to make them pretty angry - all that production and nothing but money losses. And the spots that have been tapped to date are those with the best sites - cheapest to drill, greatest production rates. But those have been squandered during the last 8 years of really cheap methane prices. Oh well, as the saying goes, “Cry me a river”. Given the evil that their actions will do for our planet via global warming and climate weirding, it’s hard to feel sorry for them - easier to do that  for the investors conned by gas industry and Republican promises, but then they ARE supposed to be careful with that money. Unlike the wind, a lot of that money can’t be replenished….

Of course, in a sane world, we would be installing wind farms all across the US like there is no tomorrow - reasonable cost electricity, rapid energy payback of ~ 9 months for each turbine installed, and lots of economic stimulus/real wealth creation, especially since almost all of the turbine components are “made in USA” these days.  But for a while, we are not in a sane world, and especially a sane country, as evidenced by the election of November 2016. But who knows, maybe we can rejoin a realm of sanity in the near future… Anyway, it’s certainly more pleasant to believe that we might, even if presently there are few facts to back up that assumption/wish….


Saturday, November 26, 2016

Trumpzilla - Grief Central for Renewable Energy (at least for a while)….



As a country, America can often excel at things, though sometimes those things are nothing to be proud about. The impending disaster that is The Donald as President is one of those things not to write home about - a shameful event whose magnitude still has yet to dawn upon a lot of people. But most of them will eventually get it, and pay for it in lots of ways. Those responsible for this event - well, maybe they will persist in claiming it's not all that bad, or it could be worse, or something - after all, for many all they did is either not vote at all or merely cast a vote for this Potential Debacle on an epic scale. After all, so many thought he never had a chance to win, so this was their protest vote. And such a protest, though for many the ones doing the protesting many find that it falls on deaf ears. Undoing the damage may not even be possible, especially if you fall in the bottom 90% of the income and wealth scales of America…

But seriously, if there were such a thing as  Godzilla, would you bring him to your town - say for the July 4 parade and fireworks - what could possibly go wrong?  How about to meet your mom or to impress your significant other? Oh, the fireworks! Barbecue anyone? And while the top image has some comic aspects to it, if there were such a beast such as ‘Zilla, seriously, the more distance you keep between it and you and all those you like and love, the better. After all, as the story goes, this beast got unleashed by firing off a nuclear bomb in just the wrong spot, and how could that possibly sound like a good thing to do? In the history of bad ideas, well, unleashing The Donald certainly rates high on the list…

But rather than key on so many aspects of this - which will get covered en masse while its still allowable to do such a thing, as there’s just a never-ending story to it all - let’s zoom in on one of Trumpzilla’s targets - wind turbines and wind sourced electricity.

The Donald and wind turbines do not seem to be copacetic. He hates the way they look, at least when they are near any of his golf courses. He is certain that they will depress the value of his golf course (what could be more important?) and that it will detract from the golfing experience for him and the patrons of his project located on the North Sea coastline near Aberdeen, Scotland. He’s got big plans for that place, and even though he lost every appeal, court case and legislative appeal to the Scottish Parliament (where he was thoroughly mocked and insulted because he would not shut up about it), he is STILL pushing on British politicians to stop the impending wind farm proposed for the waters next to his golf course. It seems that the North Sea is both shallow and amazingly windy (sounds like quite the challenge to play golf, especially for such a terrible golfer as The Donald), and a great place to put wind farms. The European Offshore Wind Deployment Centre (EOWDC)  project - using 11 of the biggest turbines made to date in the world - is scheduled to be installed shortly between 1 to 3 km offshore by the socialist enterprise known as Vattenfall (the electric company owned by the government/people of Sweden). It’s actually an R & D demonstration project, and on the few days with visibility, wow are these hummers going to be visible. The turbines are MHI-Vestas V164 turbines with a rotor diameter of 538 feet and an top rotor maximum height of 773 feet (http://www.4coffshore.com/windfarms/aberdeen-offshore-wind-farm-(eowdc)-united-kingdom-uk47.html). Talk about giving The Donald the NY Bird “bigly” and 11 times at once! And for decades! For an image conscious guy, that’s got to be ever so hurtful. How to get revenge?

But then there is the case of Atlantic City, formerly home to 3 casinos owned by/developed by/operated by The Donald. It seems they actually have a smaller wind farm array located right on the coast (at the water treatment facility): 



But since people gambling in the casinos are not supposed to look OUT of the casinos (at least while gambling), evidently, no big deal. These 5 GE turbines were put in almost a decade ago, and are mostly used to power up the sewage facility, though on occasion their excess electricity used to help power up those gambling palaces/money extraction zones for dopamine junkies. And while there may have been complaints, by the time these were installed The Donald had gone bankrupt on the Atlantic City facilities more than once. The last of these recently shut down, throwing lots of people out of work (http://www.usatoday.com/story/money/2016/10/10/trump-taj-mahal-closes-after-years-losses/91845566/). But The Donald has been forced out of that scene for some time, though not without some serious money extraction from casino investors, the State of New Jersey and many more, as well as tax avoidance possibilities worth nearly a $916 million that has been spread out over a generation…

So, wind turbines in Atlantic City - OK. Wind turbines next to The Donald’s dream golf course in a place with some of the worst weather, on average, to golf in - very bad. But since we are in the Post Truth Era (PTE), it only depends on what the whim of The Donald is at any given time and place. Be flexible, as flexible as is the concept of PTE, and it won’t trouble you possibly worried mind….

The EOWDC is stated to cost close to 300 million Pounds, or roughly $US 500 million. It’s been close to a decade in the making, and it will be used to demonstrate cost saving design, construction and operation techniques for mega-turbines. Scotland intends to be fully powered as far as electricity goes with renewable energy energy by 2020 (they are close, using hydropower, onshore and offshore wind turbines). No nukes, no coal power and no methane energy sourcing for their electricity. In fact, they want to earn a nice income from sales of offshore wind sourced electricity (possibly waves and tidal, too) to England and Northern Europe. The deployment of these offshore projects will serve as employment for those now servicing the offshore oil and gas industry in Scotland, especially a useful concept since the oil and gas fields are rapidly depleting. It seems like a perfect match - awesome wind resource, a highly skilled workforce, a huge market for renewable electricity in Europe, energy storage in Norway interconnected via HVDC lines. And the golf-business-tourism fantasies of The Donald never have and never will be able to interfere with that future, even if he manages to assume the Presidency in 2016, as scheduled.

As part of the 2016 campaigning for the Title of President, The Donald pandered relentlessly to some, and insulted many others. Some “panderees” (those pandered to) included the still or ex-coal mining dependent regions of Appalachia - Pa, Ohio, WV, Ky, Tenn, Va - which ended up giving him many electoral votes. It does not matter that the reasons for the demise of employment in the coal biz in that region - depletion, mountain top removal, the destruction of unions and the below the cost of production of fracking sourced methane in the Marcellus and Utica shale zones - mean that coal will become more and more irrelevant as an economic engine for the region. Scapegoating is a skill perfected by The Donald, and it was those darn environmental regulations such as the Clean Sky Initiative - those are to blame. And competition to the use of coal to make electricity from old or new nukes and methane fired generation facilities - that’s not a problem (in a non-PTE world, it IS the problem for coal usage, but we’ve now departed from that realm…). Wind turbines are also a problem, as they use up the available market for electricity. Wind turbines will be supplying close to 5.5% of the US electricity at the end of 2016 (http://www.eia.gov/todayinenergy/detail.php?id=28512), and probably over 6% by the end of 2017. And since not even old nukes can compete with the marginal production cost of electricity from wind turbines once they are installed… each wind turbine installed means either less fracking methane and/or coal gets used for electricity.

Of course, when or if the people in Appalachia ever get their senses back from whatever voodoo The Donald has induced in so many of them, they will realize that once again, they have been had. There will be no recovery in the US eastern coal market, where prices are now in the $40/ton range, and which has to compete with strip mined lignite from Wyoming/Montana/Colorado/NorthDakota that goes for $9/ton. The biggest 3 coal companies in the US are now operating under bankruptcy protection, and they seem unlikely to make any money mining coal to make electricity (for steel production, maybe its a money maker). But then neither is the fracking for methane biz in that region - prices are often in the $0.50 to $2/MBtu range, and nobody is making much (if any) money at such prices. And this region supplied close to 1/3 of US methane last year. Meanwhile, there is more and more midwest wind, and Canadian wind. And there is energy efficiency - the goal of replacing the incandescent lightbulb with either CFL or LEDs is almost complete. That alone has shaved 2% off of US electricity demand. Smaller computers, LCD displays and iPads now means that electricity needed for home and office computing has drastically shrunk, so there goes THAT market, too. As for the big server centers (which is a growing market for electricity), more and more of these are seeking long term (20 years or more) contracts (Power Purchase Agreements) at stable, predictable prices. And that just cannot be had using coal, nukes or methane, as nobody knows what long term methane prices will be other than much higher. Wind turbines are the safe bet for those, too.

But there are other aspects to The Donald and the coalition that brought him to power. Another acronym for Republicans is GOP - Gas and Oil Party - and they seriously need higher prices NOW for both methane and crude oil. Upstart competition like wind turbines shrinks the potential demand for fracking based methane (now the majority of methane extracted in America), and that keeps prices low. Since drilling and production contracts/financing deals for methane and oil forbid throttling back production when prices suck, all that can be done is to steal market share from someone else - in this case from coal burners and nukes. But when prices finally do rise when demand exceeds supply for methane (and when a lot of coal burners and nukes have shut down, forever), coal prices will also rise and some increasing use of coal is expected. But most likely it will be stuff shipped in from the strip-mines in the west, the $9/ton stuff. That is, if the coal extractors for Appalachia have not mostly been shut down, forever, by then. After all, bankrupt coal companies can only go so long without a profit before the banks and bondholders finally pull the plug.

So the future for wind turbines may be to experience a “delay of game” for a couple of years. But subsidies for the industry end by 2022, and largely by 2020, with the phase out beginning by the end of 2018. Will Republicans and The Donald do massive subsidies to Appalachian coal extractors (and tax credits and depreciation don’t cut it if there are no profits to avoid via credits and depreciation)? Doubtful - coal sales for the US are only $25 billion, and less than $15 billion for the east of the Mississippi River stuff and again, just losses, no profits. Meanwhile, Low Wind Speed Turbines have become amazingly efficient at tapping the Great Plains winds at amazingly low costs per delivered MW-hr. Once methane prices rise (a result of little new drilling/fracking and rapid depletion of shale gas wells and ever poorer resources to tap), UNSUBSIDIZED wind turbines will actually be the lower cost option for electricity. And by 2018/2020, well, that’s a long time away, assuming democracy is even possible at that point. So those longing for a coal revival in Appalachia, as well as a fracked methane one will once again get The Shaft. That’s the other aspect of The Donald, perhaps his One True Essence, as if you’re not rich, you’re nobody, especially after the votes have been cast. A grifter’s gotta grift, and after a lifetime of doing that and screwing people/investors/governments out of at least $3 billion with zip to show for it, is The Donald going to wake up and See The Light? Seriously, in the Heart of Darkness that is his meager mind with respect to anything that is not marketing and looking for the next mark?

You might have better luck at bringing Godzilla to the wedding reception. At least that will have a quick end….

Last images to remember The Donald by… These are of the MHI-Vestas Burbo extension (near Liverpool) V164 turbines; there will be 32 of them eventually installed, and some are now making electricity. And Trumpzilla will not be happy at what these are foretelling...., but unlike that Personality Disorder posing as a humanoid, most people find this project a step in the right direction. And they sure do look cool...





Monday, May 30, 2016

Some Wind Energy News & Views - May 2016


from http://www.windkraft-journal.de/wp-content/uploads/2011/10/E_101_ENERCON-254x300.jpg

At the end of 2015, the wind energy industry was finally given a 5 year incentive package in return for a rather meaningless gift to the oil and methane industry - the ability to export US made crude oil. Since the US still imports 9 million bbls/day from Mexico, Canada, South America and East Africa (plus a bit from the Middle East), one would think this is really dumb, but the thinking behind the oil industry is that not all oil has the same quality. Thanks to fracking, the US produces too much “lites” - too much propane, butane, pentane, hexane and octane, not enough of the “diesel cuts” - so we could export our crude to countries needing such materials while we continue to import crude rich in “middle distillates. But thanks to the Saudi Arabian induced collapse in oil prices (designed to bankrupt US fracking based oil producers as well as Canadian Tar Sand Sludge producers), this is a pyrrhic “victory” to US oil and methane producers. And with US oil and methane production now dropping because the businesses in the fracking biz are going bankrupt/no longer drilling (engaging in capital investments because their expenses exceed their income), oil exports of crude from the US just keep getting less and less likely. Oops…

Meanwhile, the Production Tax Credit (PTC) was extended for 5 years, but with a “phase-out” arrangement. The value of the PTC will start falling at the end of 2016 and go away completely by 2019 (http://programs.dsireusa.org/system/program/detail/734). Projects have to “commence construction” by the end of 2016 to get the full 2.3 c/kw-hr subsidy, and it drops in a regular manner after that:

- by 20% (to 1.84 c/kw-hr) for projects commencing construction by the end of 2017
- by 40% (to 1.38 c/kw-hr) for projects commencing construction by the end of 2018
- by 20% (to 0.92 c/kw-hr) for projects commencing construction by the end of 2019

Of course, wind turbine owners still get the full MACRS tax deduction, which almost always was worth more that the PTC, anyway, and the MACRS is much easier to utilize.

In theory, this is a disaster for the US wind turbine biz, but in actual fact, not likely to be that at all. Thanks to the development of Low Wind Speed Turbines (now THE dominant type being installed in this country, even in high wind energy resource zones), the delivered cost of electricity from wind has dropped by roughly 20% to 60%. And thanks to the end of almost ALL fracking based drilling for methane (prices are now too low to justify the $10 million per well investment, especially in the Marcellus Shale region), methane production rates are already declining. On 5-25-16, methane was selling for $1.48/MBtu at the Pa-NY border, and $1.56/MBtu in NY City. And since it costs roughly $6/MBtu for most fracking gas wells to “break even” - well, that is some bad math indeed. See http://www.eia.gov/todayinenergy/prices.cfm.

Fracking and new wind turbine farm installations both run on credit. When it is perceived (based on lots of empirical evidence) that frackers are horrid credit risks, they won;’t get as much money for loans or via bonds and what money is forthcoming comes at higher rates. Bonds used to finance fracking are now relegated to junk status or lower, and interest rates/yields of much greater than 10%/yr are now needed. And with prices in the pits, money costs now in loan shark territory, that means that is not a good business to be in right now. There are only 85 gas drilling rigs active in the entire country at the present time - less than 5% of the all time high point 8 years ago. And as can be seen in the monthly dry gas shale figure for May of 2016, ALL fracking fields are now on a downward production trend. Especially the biggest of them all, the Marcellus. But, the oil and gas biz is not a charity….

So, a fracking gas well produces roughly 90% of its methane in the initial 5 years. unless drilling rates increase dramatically, the SU fracking based methane production rate could EASILY drop for the present 43 billion cod to less than half of that. And a lot of methane also gets produced as “associated gas” - a by-product of oil production. http://www.eia.gov/naturalgas/weekly/#tabs-rigs-2. As oil fracking drilling also spirals downwards in activity, that methane production will also drop. And then methane prices will rise, a result of decreasing supply and more or less constant demand. And when methane prices rise so does the cost of making electricity from methane. All this is going to make wind turbines a very smart investment in 2018-2020. Rising methane prices will mean drastic profit potential for those with the ability to deliver electricity that does not involve methane usage. And since no new coal plants or nukes (aside from 2 in Georgia, the likely last of their kind) are in the works, well, for those pursuing money, this looks like good times ahead for those who have operating wind turbines. Especially in NY State, where Casino pricing rules and long term Power Purchase Agreements seem to be almost impossible to get. Of course, if you are a consumer, prepare for a major fleecing, but then electricity consumers are not exactly on the top of the proverbial food chain.

That 2.3 c/kw-hr tax credit (minus financing costs and legal work, which are not insignificant) is no longer going to be that important when gas prices spike due to decreasing supplies (via no new investments in drilling) and a more or less constant demand, causing electricity prices to spike. In fact, the 2.3 c/kw-hr is likely to be lost in the noise.

Anyway, the US and many other countries are now in a wind turbine “boom” era, which is likely to continue for many years. Employment in the US wind biz, according to AWEA, is now 88,000. It looks like at lest 10 GW per year of new installs is likely for the next 5 years. See http://www.awea.org/Resources/Content.aspx?ItemNumber=5059 for the trend. Average production in February of 2016 was ~ 32 GW and average capacity utilization of the 48,000 operating wind turbines was around 40% (see https://en.wikipedia.org/wiki/Wind_power_in_the_United_States). Of course, February tends to be a windy month, though thanks to El Nino weather, not so good this year. Average wind production was 21.8 GW for all of 2015, or roughly 5% of US electricity consumption. By 2020, close to 9% of US electricity consumption is likely to be wind turbine based.

As far as NY goes, we seem to have been by-passed by this wind boom. Thanks to the Marcellus Shale, NY has some of the cheapest electricity in the country, so why bother with new generation?There are still several wind farms that got their RPS subsidy from NYSERDA in 2013 (Black Oak, Cody Road) and especially 2014 that have yet to be installed, despite the 3.5 to 2.2 c/kw-hr NYSERDA subsidy that goes on top of the PTC and MACRS subsidies. Of note is the Arkwright wind farm proposed for Chautauqua County (36 x Vestas V110 turbines) and the Jericho Rise one in Franklin County (37 x G114 Gamesa). Both are slated for installation by 2017 (commencing in 2016, of course) and both use LWST units of ~ 2 MW capacity. These units are amount the best at extracting electricity from low to moderate winds. Both are being developed by EDPR (Portugal, ex-Horizon Wind), and both should be quite profitable given trends in the methane biz in the US. See https://www.nyserda.ny.gov/All-Programs/Programs/Main-Tier/Main-Tier-Solicitations and https://www.edprnorthamerica.com/farms/regulatory-permitting-information

Closer to WNY, THE happening project of note is actually not in NY but in Ontario - The Niagara Region Wind Farm is now being installed. This is a 230 MW project owned by Enercon and it will use 77 E-101 Enercon turbines installed on 125 to 135 meter tall concrete towers. The project will be located between Port Maitland and Grimsby, and it will straddle the Niagara escarpment/region of Ontario. This project was facilitated by the Green Energy Act/FIT, and it also involves actual local content. The electronic module and concrete tower sections are being made in new factories built for this project; blades will probably come from Quebec. These 3 MW turbines may be visible from Buffalo (land height plus 135 meter tower plus 50.5 meter blade radius. This means that the tips of the blades will be 608 feet above the ground at their highest point. See http://www.nrwf.ca/project/


On the image, note the placement of cell phone antennae (2 sets) on the tower. Those are situated ~ 200 feet above the ground. So here is a situation where ugly cell phone towers get replaced by a 135 meter concrete tower where they hardly get noticed at all. Will wonders ever cease? Image from http://www.windkraft-journal.de/2014/06/27/hamburger-beteiligungsgesellschaft-cee-setzt-den-ausbau-ihres-windkraft-portfolios-fort/54093

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