What's Up With NY Wind Turbines?

                                          Worker at the Gamesa factory near Pittsburg, Pa

Texas politicians, and especially right wing, usually Republican ones, tend to hate most things environmental. Oil, natural gas, tracking, horrid "cancer alleys" affiliated with petrochemical complexes, oil refineries and other industrial operations, the largest state CO2 pollution rate (and most other pollutions, too) and the 13th largest per capita CO2 pollutant rate in our country - to the right wing nut leaders, it is the smell of money, and a heady and intoxicating perfume, too (see http://en.wikipedia.org/wiki/List_of_U.S._states_by_carbon_dioxide_emissions). In this state, business and evangelicals have forged an unholy alliance, and that entity now controls most parts of the state and especially the state government, or what passes for that. And despite horrible and worsening droughts (predicted to occur via Global Warming), most politicians refuse to acknowledge the science behind climatology is also the same science that makes prospecting for oil and gas possible, or oil refining something other than an exercise in magic. But when it comes to wind turbines, Texas is leading the way in this country, which makes sense when you consider that it has the biggest onshore and offshore wind resource of any state in our country. At the end of 2012, they had 12,212 MW of capacity installed, averaging a net output of around 32%. There are over 10,000 people employed in the wind biz in Texas, and a lot in the manufacturing of them, too. In the U.S. there was only a bit more than 60 GW installed (60,000 MW), so about 20% of the nation's wind power capacity resides in Texas.

Just don't expect most right wingers down there to get excited about the environmental benefits of wind turbine sourced electricity (averaging a delivered 3.6GW in 2012 in Texas, and with lots of Economic Curtailment, too). Some may not mind the pollution less electricity, and a few will boast about it, but with wind in Texas, it is strictly money that talks. Actually, the electricity without CO2 pollution doesn't have much meaning to that crew, but the ~ $25 billion invested in the "bidness of wind" and the cheaper electricity prices that result (via the Merit Order Effect) are quite popular (and very unpopular with owners of coal, nat gas and nuke based generation facilities). In the end, money rules the right wingers in Texas, and that's why they like wind energy in a state where politically, they should hate it. This impressive wind energy deployment (but barely scratching the surface of their 750 GW delivered wind energy potential) has been made possible via their Renewable Portfolio Standard (RPS) - see http://en.wikipedia.org/wiki/Wind_power_in_Texas. Their toughest obstacle (more than the collapse in natural gas prices in 2009-2013) is their inability to store electrical energy (not much  water where it is hilly and/or where the electricity is made, so pumped hydro can't be used and more expensive routes such as compressed air or batteries has to be arranged). In general, it is windiest in the western part of the state where population density is low and it is a long way from major electricity markets (industry and air conditioning - to state summers in Texas as being oppressively hot is, in general, an understatement).

But, they "git er done"; the wind content of their electricity mix is around 8%, and Texas is THE biggest state in terms of electricity consumption in the U.S. They are also investing around $17 billion in a transmission array which will allow more wind to make it to the populated eastern parts of the state. But unlike turbine deployment, that process is a lot slower…

Meanwhile, in the so-called liberal enclave of NY State, things are different. A lot of our renewable energy programs seem to be driven by the "environmental-ness" of renewable energy, with frequent mention of how much CO2 pollution can be avoided by the use of renewables. We also have an RPS, but ours is different than the one in Texas (and the Texas version is quite common in a lot of the U.S.). But whenever the topic of a NY that is powered up by renewable energy pops up, hydroelectricity and wind turbines are sure to be mentioned. And why not - about 99% of the renewable portion of "Made in NY State" electricity is either hydropower (88%) or wind (11%). But since the hydropower potential of NY is pretty well tapped out, if the amount of renewables generated is to go up, it probably won't be done with hydro - it will need to come from wind, biomass, biogas, tidal, run-or-river or PV. And odds are, if costs are to be kept under control, it will be either biomass or commercial scale wind that will have to do the trick.

There are 338 dams and one "Niagara Falls", plus two pumped hydro units in NY - but the bulk of our hydro comes from the Niagara Power Project (52% of our hydro last year) and the St Lawrence River FDR dam (27% of our hydro last year). Only 2.9% was provided by pumped hydro; that has to rise as the renewables content of NY's electricity rises. But the big question concerns how to raise the renewables content of NY's "grid mix", since the original goal for NY ("25% x 2013" - with a starting base of 18.6% (2012 value) via hydro) - see http://www3.dps.ny.gov/W/PSCWeb.nsf/All/1008ED2F934294AE85257687006F38BD?OpenDocument - is nowhere near close to being achieved, despite the best of intentions. According to the schedule (see 2006 Performance Report, http://www.nyserda.ny.gov/Publications/Program-Planning-Status-and-Evaluation-Reports/Renewable-Portfolio-Standard-Reports.aspx), we managed to hit 36% of the 2012 target set back in 2004 from just wind; add in wood burners (35.4 MW) and a Brookhaven PV array (3.6 MW) and this boosts it up to ~ 390 MW, which is (almost) 2008's goal. Ooops…. The numbers about which renewable project got RPS awards and just the total installed renewable capacity are a pretty good fit, though slightly different (more on that in a bit). What both sets of capacity installs have in common is a significant failure to meet the very modest 2013 targets…. let alone the more aggressive 2015 ones.

In December of 2012, the last of the 70 of some of the largest turbines (in 2012, anyway) installed in the US were declared operational at the Marble River wind farm in the northeast corner of NY near the border with Quebec. Portugal's major electricity producer and one of its largest companies (EDPr) owns this project, which probably cost near $450 million. It features 70 of the Vestas V112 x 3 MW units on 94 meter tall towers. At the highest point in its rotation, the tip of a blade would be 150 meters (492 feet) above the ground. NY now has 1633 MW of wind turbine capacity, and this represents a decent, though inadequate, investment (about $3.3 billion) which also has created very few permanent jobs (about 300). Don't you just love conundrums…? And if all goes well with the Orangeville project (94 MW, slated for installation this summer), well, that still won't help meet the 2013 goal, though it might help with the 2014 numbers. And it also won't do much for permanent jobs, though any jobs - including the temporary construction ones associated with the NY part of the Orangeville project - are welcome at the present time.

A "new, improved" RPS goal of "30% x 2015" was established in 2009 in Governor Paterson's administration, but like the others, that one is more of an aspirational wish than a likely target, assuming the things keep going the way that they have been, er, "progressing". Obviously, stuff happened along the way so that the dream only got to maybe 40% achieved. If things go as expected and the Marble River adds its expected 70 MW average over a full year, NY's wind turbine output would average about 380 MW, and the RPS Main Tier goal of 1124 MW would be shy by 605 MW of average output, with the output of all RPS qualified renewables at less than ~ 40%% of the target. But adding approximately another 100 MW of delivered renewables is just not in the cards unless something changes drastically. Of course, there is no physical reason why it could not be reached other than a horribly flawed RPS system that has failed to deliver as promised....

As of 2012, the renewables installed under NY's RPS program were 1584.7 MW (plus the 92.8 MW for Orangeville, which is being installed this year) of wind (including 50 MW of Pa projects), 92 MW of biomass (mostly wood burners), 53.9 MW of biogas (mostly landfill gas) and 50.1 MW of hydroelectric (mostly small dams). The numbers listed as energy outputs in the glossy "2013-rps-report.pdf" report don't match the NYISO official data, and the inclusion of the biomass, biogas/LFG and hydro values (196 MW capacity) probably adds at least 100 MW onto their totals. This is how they can claim they are up to 47% of their goal….

The recent publication of the 2013 NYISO Goldbook ("Capacity and Load Data") provides a bit of information on every electricity generation unit with over 0.1 GW-hr/yr of power output in NY State. All but 4 wind turbines provided data (these used their electricity made on-site, from 5.05 MW of capacity), and since the NYISO is all about electricity put onto the grid, well, that makes sense. We now have 1628.4 MW of wind turbine capacity "online", and 1418 MW of that was operational for the full year. If these were performing as anticipated by the project owners, these would be kicking out around 400 MW on an average basis (35% net output). But, instead these are averaging around 23.4%, ranging from 19% to 28.6%. In general, the greater the rotor area to generator capacity ratio, the better the net efficiency, and the same goes for the taller the tower. Needless to say, there is room for improvement. And since most of the RPS expectations were based on wind, well, this probably knocks around 200 MW off of their hoped for energy output. Oh well, live and learn...

This can be contrasted with Kansas, which is a windier, flatter and much less "tree-infested" region than is NY State. For the 10 wind projects that have been operating since 2001 to 2010 and which have at least a year of operation, the total capacity is 1162 MW, and the average efficiency is 37.4%. In general, the turbines are often the same variety as those used in NY State, especially the GE 1.5 MW x 77 meter rotor diameter on an 80 meter tower. The efficiency of these wind projects ranges from 31.6% to 41.6%; obviously, having world class winds is helpful, but there appears to be more than that at play. The worst yielding turbines were the Vestas V90 x 3 MW units (which need faster winds than those present in Kansas to behave optimally). All of the wind projects in Kansas have long term Power Purchase Agreements (PPA's) between the project operator and the local electric utility monopoly, while there is nothing like that for almost all of NY's projects, and instead the price owners get paid is a combination of a small "extra" (the NY State RPS, ranging from 2.2 to 1.45 c/kw-hr) paid on top of the prevailing for the hour price on the NYISO pricing market as well as any of the Federal subsidies that the owners can get from the Federal Government via the avoidance of taxation on passive and active income. The Kansas projects just get the flat price of the PPA plus the same Federal subsidies, which are made more lucrative because of the greater efficiencies of the wind farms in Kansas.

In 2012, Kansas added 1588 MW of new capacity, including one mega project of 419 MW that uses GE's new 1.6 MW x 100 meter rotor blade units (their Low Wind Speed Turbine entrant in that market). This will add between 600 to 700 MW on a delivered basis to the Kansas wind turbine output, and much of this will be exported out of state, though it will also have the perverse effect of displacing natural gas extracted from some of the huge conventional natural gas fields in southwestern Kansas from the electrical market. Even in a region that went hard-core and then some conservative, the attempt by the Koch brothers to stop any growth in the Kansas wind market failed in a pretty resounding manner. It seems that farmers really love their turbines, and especially the money that comes in from essentially doing nothing - drought or no drought. And last year's drought in Kansas (a record setter and probable future trend due to Global Warming) did the job on agricultural output, especially the corn crop, but lack of water does nothing to "the wind crop".

So, NY could reach the 2015 goals, but it will certainly need to change its electricity pricing scheme for renewable energy, as the present one just does not seem to work. It would also help if the far below expectation yields of NY's wind turbines could be analyzed. After all, if the average yield was even 33% instead of 23%, an average increase in yield of 144 MW would result - allowing the 2009 goal to be achieved (544 MW). One of the prime rumored reasons is a phenomena called "Economic Curtailment", where wind turbine output is deliberately stopped when the outputs of turbines dumps enough electricity onto the NYISO market that prices crash/conceivably could go negative. And another would be that the wrong kinds of turbines have been bought for the NY area - LWST and tall towers (taller than 80 meters) are needed since we have trees and hills which more or less require tall towers. And perhaps the wind turbines are being located too close to each other, as losses due to "wind shadow" result from putting them too near each other. After all, at an average of $200 million per wind farm, wouldn't you want your investments operating at 35% to 40% of rated capacity and not 23%?

Based on the performance of the turbines in 2012, taller towers and a higher ration of rotor area to generator capacity does help a bit. And once the Orangeville units are installed the effect of LWST will be able to be observed (they anticipate a net yield of 34% with these). But the technical and engineering fixes to NY's poor wind turbine performance are the easy ones to accomplish. Things like Economic Curtailment may be tougher to fix. And of course, there is the money question - is the investment making any money, or is this just more speculation and "adventures in tax avoidance"? Of course, operating at 40% and not 23% would do wonders in the profitability area - almost cutting the cost of production in half. And isn't that a major goal of investors?

As for the pricing system… what to do with that steaming pile? In almost every state of the union where an RPS has been tried, the goal has been to get long term Power Purchase Agreements (PPAs) in place between the wind turbine array owners and the grid monopoly that distributes the electricity to the mix of customers (residential, commercial, governmental and industrial). If you wanted to kill off a wind to electricity generation business segment, the easiest way to do it in a sneaky manner (so that politicians can pretend like they are for renewable energy when the opposite is really the case) is to tie the price of renewable electricity to a casino like market where the price can never be predicted, only guessed at. You would need to make sure that a predictable price cannot be arranged, and better yet, let the competition to renewables (natural gas) set the price for renewables, which is what the NYISO system does right now. Well, looks like it is "Mission Accomplished".

In our capitalist system, things that make money (in some manner, even if by converting avoided taxes into a definable income stream) experience a positive behavior modification reward - the money - which then encourages more of this behavior. That money is used by owners to buy things, pleasure, comfort, isolation from hardship and it also gives them status among their peers. And as long as the money making goes on, they can go to people with or entrusted with obscene amounts of money, borrow this and/or invest some of this to go do more money making. Hopefully (and actually, in the case of the wind business), this process will also create jobs for people, and increase the wealth and well-being of our society. And the wind biz is a great economic stimulus; it tends to make a lot of middle class, real wealth creating employment, and a lot of businesses along the way, too. But it has to be profitable, to make money. In our society, the $100 to $200 billion of needed investment in NY State to create a 21st century electricity generation system (and in some cases, up to $1 trillion, depending on how much spar sourced electricity is added to the mix) in the next decade or two will just NOT HAPPEN if it is not profitable.

A stable price offered for wind based electricity actually leads to profits AND lower prices to ratepayers. It does this by lowering the cost of borrowed money, because stable electricity prices means that a predictable cash flow can be defined (since energy output won't vary by much on a yearly basis), and bankers/investors like that sort of thing. If they can't get that, the price of money goes up, and since most of the cost of capital intensive investments like wind turbine based electricity generation is the cost of borrowed money/investor money, higher money costs means higher electricity prices and/or lower profits. And that is a negative behavior modification signal, big time.

Any comments? BTW, don't forget to contact your political leaders (local, state, Federal) if this situation sounds less than optimal to you. Most of the reasons that NY State cannot meet the really meager goals set for renewable energy are political. As in the present whacked out RPS system, and the need to tie wind turbine electricity pricing to the variable NYISO ones that seem to be set by the price of natural gas or coal based electricity from outside of NY State. There is no engineering or scientific fix for that insanity - its all political. Supposedly that's "voice of the people" and "will of the people" stuff. Supposedly. Oh well, renewable energy is part of the cure for future Frankenstorm Sandy's - and if the RPS /renewable electricity pricing system in NY State is not fixed, we are just maximizing the probability of even nastier storms and weather events like Sandy to come our way. So isn't some politicking on your behalf worth it?

Top Image from http://www.nytimes.com/2012/09/21/business/energy-environment/as-a-tax-credit-wanes-jobs-vanish-in-wind-power-industry.html?pagewanted=all&_r=0

Solar PV Manufacturing in 2012 - A Business Horror Tale

First Solar's PV Plant near Toledo, Ohio

Background - A Business Theory of Stuff

There is a balance required between makers of stuff and the customers for their stuff, especially stuff like PV panels is considered (in other words, stuff that is used to make other stuff). If the balance gets too out of whack, the arrangement falls apart, people lose their jobs, businesses go  bankrupt and probably out of business. Keep the balance and things can be great, and make the world a better place, too. If the price charged for these "capital goods" is too high, the customers who would hopefully buy this "stuff that makes stuff" won't buy as much, or maybe none at all. After all, they are buying this stuff to make other stuff, and THEIR customers will only pay so much for the product (in this case, electricity made by PV panels). As prices drop for the PV systems, more people should be able to buy PV panels, all other things being held constant.

However, if the price of generated electricity also drops, then the sales of PV panels at a constant price/cost to make them will drop, as the customers for these systems generally cannot get their potential electricity customers (ratepayers) to pay more, especially if those customers could go elsewhere to buy their electricity. Even if the customers restrict themselves (or are restricted to) only renewable energy, there are lots of options for this electricity - in NY State those would be onshore wind, biomass, biogas, tidal and new hydropower. And if customers for the PVs cannot borrow money to pay their debts back over a long term at reasonable rates, well, that also puts a stop to things in pretty dramatic fashion. One reason that lenders might stop their lending would be if previous loans made stop being repaid - for example, if the price paid by electricity customers drops and thus less revenue from sales of electricity is the result of this electricity price insecurity. It is surprising how fast the money tap can get turned off if there is a pattern of loans not being repaid in a sector such as PVs. The same also applies to PV manufacturers as well as customers for them, as a capital intensive industry such as PV manufacturing runs on a sea of debt which (hopefully) gradually gets repaid. It is not a cash only business and if the perceived risk of loan default (or actual risk) rises, well so does interest rates, and the loan term gets shorter. This raises the cost of money, and thus the cost to make PVs and also install them.

The ideal combination for PV manufacturers is a high price for electricity, and lots of customers (those able and willing to pay the desired price, and possibly more than that). On the other hand, the ideal combination for customers is cheap PV prices and/or lots of subsidies that effectively lower the net price of these systems so that they seem cheap, even if somebody (or somebodies) gets stuck with the tab. Since the price (in theory) reflects both the manufactured product cost and the installation cost (plus profits, assuming there are any), and customers really don't care which one adds how much (but instead, its is the sum of them that is the main refrain) all that matters is the final installed price. Installers would want high electricity prices, low manufactured product prices and lots of customers with money, or at least those with access to to lots of subsidies. Unfortunately, in the US, most subsidies are tax avoidance based, which means that the richer you are, the more subsidies you can take - a bit of reverse Robin Hood syndrome if there ever was one.

                   
                                    Touring First Solar's Plant in 2006

                                       Discussion - OK, No More Theory
In the US, the average PV company is really a PV installer company, with 9 employees. Almost all "PV employment" in the US is installation based, and they can often do other work in other related areas (light construction, electrical) which they might have to do when things in the PV business are less than optimal. What is unique is those who manufacture the products. To do this cost efficiently, these are large scale factories costing at least $50 million each (and often many times that) - such operations cannot be the small business that installers can be. Such operations foster a supply chain with many times the number of jobs and economic influence of the PV assembly facility. The processes to convert materials into semiconductors and then make photovoltaic systems out of them often involves lots of toxic and high purity conditions, and many silicon PV systems need silver metal wires of the "top side" to collect current generated by absorbed light photons. Lately some of the banks which financed significant quantities of Chinese PV manufacturing factory construction for silicon based PVs have been gaming the silver market (PVs have replaced photography as a major user of silver) - quite a cute trick, and it is little wonder the term "bankster" (gangster + banker) is back in vogue.

Recently the magazine "Renewable Energy Focus" (March/April 2013) had an eye-opening article about the state of PV manufacturing worldwide. It turns out that the huge overcapacity of PV manufacturing in China (partly originating from loans Goldman Sachs and JP Morgan gave to Chinese manufacturers of PVs - something like $3 billion in ~2007) has crashed the PV market in most of the world, and also driven most of the manufacturing part of the business from Europe (as intended) and a lot of it from the US (China did intend on pretty much complete destruction of the US PV manufacturing sector, similar to what happened with shoes and cellphones) out of business/caused their factories to be shuttered. And with rampant overcapacity based on China's assumption that they would dominate the world PV industry, then work backwards on the entire PV supply chain industry and that everyone already in the business would fold up and go away/move to China, prices crashed. PV became a buyers market. In such an arrangement, it's like musical chairs, and when the music stops, only a few will remain - often those who are the biggest and/or who can count on governments (in China, many PV makers are state or City owned) for cheap loans, grants, loan forgiveness and other subsidies, like free factories so that there are no loans needed. Meanwhile, all costs - especially R&D and wages for employees - get slashed in the desperate efforts to stay afloat. This is a variation on the "Burn Rate" problem - can the money in the bank/initial capital/any new loans last long enough until prices can rise above production costs? Major losses have been the rule since 2010….

Last year, the top 10 PV makers in the world (sales = $US 13.6 billion) lost $US 2.1 billion making 14.4 GW of capacity (or a delivered electricity production rate of about 2.4 GW).  Most PV companies no longer have much equity left in them, and those in the supply chain also face a lot of hard decisions - like whether to jettison the sales to PV makers, because of the downward pressure on prices. In the US, with around 3 GW of installations done in 2012, only made 777 MW of panels were made, while Europe, where around 12 GW was installed (especially prominent rates of installs in Italy and Germany), only 960 MW was made, down from the 2.6 GW made in 2010. Meanwhile China made over 12 GW of PV panels and yet only installed (or was forced to "eat" 4 GW) - Taiwan was also a major exporter (often China by proxy) of 5 GWs worth of capacity - see http://www.pv-tech.org/guest_blog/top_10_pv_markets_in_2012. What has been astounding to many has been how fast places like the US have flipped from PV self-sufficiency (116% in 2010) to significant importer (76.5% imports/23.5% made in USA), while recently constructed factories get shut down. In Europe, over 92% of the PVs installed were made elsewhere; about 5 years ago that was a major growth industry in Europe. Such is the power or de-facto slave labor coupled to "free factories" that the government of China will often construct. The PVs were supposed to be exclusively an export business; domestic electricity in China would be supplied by lower cost coal and hydroelectric sources.

The 2012 total world supply made was 24.5 GW, with sales averaging around $21 billion, and losses of at least $4 billion. Many of the companies (often government run companies) making them were already deep in debt when they started production in the last few years - and the no profits scenario means they are now even further in the hole, and their debts will likely NEVER be repaid. So if you are a banker and want to lose money, loan to PV manufacturers and those closely tied to it. The Venture (alias Vulture) Capitalists funding start-ups have also succeeded to losing enormous piles of money - an estimated $3 billion just in the US for non-silicon based PVs, with 9 out of 10 start-ups in the CIGS and CdTe PV segments failing (Solyndra was one of those). Oh well, that's why tax write-offs were invented - so rich people don't have to pay taxes, since paying taxes is just for the "little people", as Leona Helmsley so diplomatically put it.

In many ways, the PV business shares a lot in common with the North American natural gas industry of recent times - overcapacity results in a buyers market, and until excess capacity is worked off, prices of the product are way below the cost to produce the product. But the PV losses are chicken feed compared to the AT MINIMUM $160 BILLION lost by the natural gas industry in the US in the last 4 years. So, no wonder companies like Siemens, Shell, BP and Bosch have bailed on PV - they don't like losing money, and they have judged that profitability and the PV business are not going to be synonymous for some time. The natural gas industry can absorb these losses because the oil business is still enormously profitable - average world cost of production is less than $30/bbl, world exports are 36 mbd, world price is $100/bbl, profits are roughly $2.5 billion PER DAY just for the exported material, and probably the same for oil made in countries that consume more than they produce, like in the US. Many methane producers are also oil producers, too, and so temporary losses in one segment can get buffered by extreme RENTIER profits in the other. But most PV companies don't have that luxury. And besides, the natural gas glut in North America is rapidly disappearing, and those losses could be made up in one "good" year...see http://www.resilience.org/stories/2013-05-05/patient-contrarians-the-natural-gas-market-isn-t-what-it-seems.

Still, a stand alone business segment doing $20 billion/yr in sales can't afford to lose $4 billion/yr for very long. And this is in one of the most subsidized forms of electrical generation for non-Feed In Tarriff  (non-FIT) countries. Many are asking why they should subsidize a foreign country like China and Taiwan while unemployment levels are still way past obscene in their own country, like the USA. After all, when we in the US import PVs we also import poverty and unemployment. Besides, on an unsubsidized basis, it costs nearly 50 c/kw-hr to make PV electricity in NY State, and the prevailing price for generated electricity is between 3 to 4 c/kw-hr. So what if domestic manufacturing adds 5 c/kw-hr to the unsubsidized price - no one will notice the difference in the quantity of subsidies needed to bring PV electricity prices down to 3 to 4 c/kw-hr, anyway.

Like the wind energy and auto industries, PV is capital intensive, and most of the jobs involved in making them are with the supply chain, but that's what pays the bills, and every PV manufacturing job has a multiplier effect similar to the specialty chemical/pharmaceutical industries with which they have so much in common. High skilled, value added, with still room for improvements in quality and performance, but unless the PV manufacturing industry in the US regains profitability, that's just money thrown down a rat hole. PV also tends to displace peak (natural gas sourced) electricity, especially in the summer, when profits to coal and nuke users are at their highest. And if you want to discourage pollution based electricity from continuing to ruin our climate, the best way to do it is not via regulation but by trashing the profitability of pollution based generation owners.

Too bad, because PVs are very popular, even if they are presently inconsequential with respect to the delivered electricity made (on average, less 1 GW delivered from 6.7 GW installed in the US) - http://en.wikipedia.org/wiki/Solar_power_by_country#United_States. Done correctly (where "economic leakage" via imports is minimized), they can be very economically stimulative, but when it comes to renewable energy, we in the US alway seems to be willing to screw up a wet dream, so to speak. So far, PV is but a nuisance to the nuke, coal and natural gas sourced generation industry in the US, unlike wind turbines (20 GW delivered from 60 GW capacity). Wind has become an extreme pest to the natural gas business, displacing over 1.5 trillion cubic feet/year of gas consumption, depressing prices for gas as well as profits for nuke and coal burner owners via the Merit Order Effect in many states. In fact, PV can function as a great diversion, and if the subsidies that used to go or otherwise would go to wind and biomass get diverted to PV, count that as a temporary victory for the polluters, where lots of tax avoidance barely translates into any avoided natural gas usage.

Of course, PV may also become a major pesky factor for natural gas based electricity generation owners. Part of the reason the the incentives for the wind industry were targeted by Republicans plus pollution sourced generation owners and fossil fuel suppliers in particular (actually, they tend to be one in the same) was that wind WAS being effective in replacing their products and in particular keeps natural gas prices low/profits via the Merit Order Effect low (high natural gas prices give rise to amazing profits for nuke and coal burner owners far in excess of just the cost of production). That's why Koch Industries (plus "friends") and the politicians that have rented/bought fought so hard to get rid of incentives just for wind and biomass at the end of 2012, but left the PV ones in tact until 2016. As it is, the wind incentives are set to expire at the end of 2013, and there looks to be no leverage on hard-core Republican ideologues who do pay attention when the oil and gas industry gives them their marching orders.

But, in the US, lots of renewable energy advocates are all heart and little brain, and seem to be really bad at strategic thinking. They don't seem to get that if the PV industry in the US is not based on making PVs here, much of the economic clout and the political force that the money making from PV profits can bring will never happen. Or that PV innovation actually requires a profitable business to pay for the R&D. Or that communities with jobs making PVs also tend to be communities that support the renewable energy effort. Or that basing PV installations on huge subsidies that only apply to the super-rich is just asking for it when the even super-richer decide that pollution based profits reign supreme, because there is way more of them. The same can be said for the wind  industry, too, but at least 75% of the wind industry components were locally sourced last year, and this year it might be close to 100%, since China and Vietnam can't dump wind turbine towers here anymore. In fact, the US may export more wind turbine stuff (supplying lots of installations in Canada and Central America for 2013) than is imported, a first. And unlike PVs, wind turbines cost a lot of money to transport, so local manufacture makes more sense.

Anyways, keep in mind that manufacturing is a bit like a complex forest ecosystem, with lots of local interdependencies. And as Peak Oil keeps pumping up prices for anything transport related, locally made tends to be the smarter way to go. Plus, the customers for PV and wind based electricity have to have income, which means that need to have jobs, and the fairy tales about free trade don't seem to produce much else but further income inequality (a feature from the point of view of those designing US trade policies) and depressed wages/income and wealth for the vast majority of the people in this country. One person's wages are another person's job via the demand for goods and services that comes from having more than just survival wages for an income.

                          

Photo of a CdTe panel being manufactured, and an American actually employed making it

                                                        The Wrap-Up
So if you want renewable energy to thrive in this country, maybe you ought to start with making them here, first, and put these snake oil dreams of "too cheap to meter" and "grid parity PV" where they belong - with the hype that early nuke proponents used. PV will never be cheap - all the labor, energy and materials (as well as the storage needed to buffer times when the sun is blocked by clouds are it's nighttime) that go into them actually does cost, and those costs need to be repaid, or at least paid by someone or by all of us via taxes. But over time it might be cheaper than it already is, or might not. And PV is going to be more expensive in places that are not a desert than where it is a desert - just like wind based electricity is cheaper in windy places and pricier where it is not so windy. It's only a problem when deception is used to hide the costs, and where the scale of deployment is large enough that the money bleed for imports plus the deception of what it really costs finally can't be swept under the proverbial rug anymore. After all, when $10 billion of PV installs requires $7.5 billion in avoided taxes (for starts) and it's the choice of whether to do renewable deployment or to fund school operations and pay for the construction of a sewage system that qualifies an area for the term "civilized", maybe something has to change.

Just remember the "Macro Model" - your income is my employment, my wages are the basis for your job. Paying the real cost of renewables is not as much of a problem as it is made out to be, especially if the economic leakage (imports) is minimized, and not maximized. And you might get less of some forms and more of other renewables, but electricity is electricity, after all. And hey, no one ever said "it's ponies and unicorns for everybody". But like Jagger and Richards did so eloquently state -

"You can't always get what you want,
But if you try sometimes you just might might find
You get what you need".

Top image: http://www.firstsolar.com/en/Press-Center/Media-Library
Middle image = http://www.toledofreepress.com/wp-content/uploads/2012/07/SolarFSWorker.jpg
bottom image = http://www.toledoblade.com/local/2007/02/14/First-Solar-posts-1st-profit-in-20-year-history.html - Factory Tour, First Solar, Toledo, Ohio

Electricity in WNY in 2012 - Strange and Then Some

Spot a trend? from http://www.oilnergy.com. Bulk prices for natural gas have doubled in the last year...

For most and possibly all of the last 100 years, WNY has been self-sufficient in electricity production. In theory, it still is that way, but due to the Niagara Power Act, a very large portion of the hydroelectric output of the Falls facility is sent out of the region, to Municipal Electric Utility customers (and some others) in a seven state region, and especially throughout much of NY State. The effect is to encourage Municipal Electric Utility formation - after all, they deliver lower cost electricity even if the generated power sold is priced identical to that in "corporate" utilities, but access to Niagara hydropower (at "cost", which is less than 2 c/kw-hr) makes the switch to MEU status an even better one. In 2012, about 64% of the Niagara Power Project (NPP) electricity was exported from WNY (excluding the Pumped Hydro facility, which also made a net 58 MW on average), so that "only" about 540 MW on average (based on a 70% load factor) was sold to supply our average demand of 1775 MW. Also, FYI, with our new "NYISO Zone A Map" (changed form 2012), we now make 1.8% of the electricity (= 32.65 MW) in this region from wind energy.

What is unusual about 2012 concerns where most of the remaining 1235 MW of demand for WNY came from - apparently, outside of the WNY region. Only 567 MW of that came from the 2540 MW of electricity production capacity within WNY (22.3% average utilization rate). So where did the remaining 668 MW come from? Some of that might have come from the average of 940 MW made in either the pumped hydro unit or else in the main generation part of the complex. However, odds are, most of this was probably obtained from outside of the NYISO West Zone - and probably from either coal burners or nukes in Pennsylvania or Ohio. On average, electricity in WNY was TOO inexpensive to be made from natural gas….

The origin of this locally made electricity can be seen in the pie chart, which contains information on the 31% of NWY's electricity supply that was made in WNY and not made by NYPA:

Data from the NYISO 2013 "Goldbook" (from http://www.nyiso.com/public/webdocs/markets_operations/services/planning/Documents_and_Resources/Planning_Data_and_Reference_Docs/Data_and_Reference_Docs/2013_GoldBook.pdf)

On average, bulk electricity prices paid to generators was 3.117 c/kw-hr in 2012, an all-time record low price, Of course, like that last 3 previous years (2009, 2010, 2011), this amazingly low cost electricity still could not really stimulate our economy (that requires an actual demand for something from people or entities who actually have money to spend on something). If you are looking for a reason as to why the WNY economy is still in the pits for most of its residents, high prices paid to electricity generators is definitely NOT one of them. Of course, what people actually pay for delivered electricity (18 c/kw-hr on average for NY State) also seems to bear little resemblance to the price paid to electricity producers for the energy they made . And this does not imply that if prices paid to generators were a lot higher (say, on average, 21 c/kw-hr and not the 3 c/kw-hr that existed in 2012) there would not be economic pain induced (there most likely would be). But claims that low cost power will bring lots of jobs and new businesses this way just does not seems to  bear any resemblance to the facts.

If this trend continues, WNY will essentially have no significant electricity generation outside of NYPA. The two highest capacity (but also pollution sourced) local generation approaches are coal (1780 MW) and natural gas (485 MW), and these were operated at 22% and 16.7% of their rated output - no wonder they were not profitable. So, no local use of natural gas fracked in nearby Fracksylvania or coal shipped from Wyoming or Illinois - instead, power plants in Fracksylvania and Ohio burn coal in those locations to make our electricity at prices lower than we can can make it in WNY. Sure it represents a loss of local jobs, local taxes and the electricity is cheaper because those Ohio and Pa power plants don't have to pay the RGGI fees like ones in NY have to do. And some will claim this is a great thing, and that our environment is so much better off (well, any time coal is not burned around here, in theory that's a good thing, but the fallout form coal burning usually comes down many mile downwind of the exhaust stack.

But it's not like that the CO2 pollution did not occur, and that it will mess up our climate and weather for a long time to come. Humans have now cranked up the CO2 content to close to 400 ppm from 283 ppm two centuries ago, with most of this increase happening in the last 50 years. And when those old retired coal burners (Dunkrik for now), and scrapped, those can never be employed for the use of locally grown biomass. The natural gas industry is desperately looking for ways to increase the consumption of their methane, and knocking out coal in favor of equally as bad a greenhouse gas polluter (via leaked methane) fracking-based natural gas. You can see why in these two graphs - one for the last year (when the price doubled - top) and one for the last 12 years (below) - the common thread is price instability. As the surplus wrought by failed market discipline and rampant Wall Street financial manipulation gets consumed via less drilling and rapidly depleting shale gas wells, price spikes (and associated electricity price spikes) will once again pay us a visit. Wow, can't wait… In this chart you can see what "normal" natural gas pricing (bulk) looks like ever since the Enron Fraudfest of 2000-2001 revealed that we no long have an endless supply of cheap and easy to get methane in North America...

                                       

from http://en.wikipedia.org/wiki/Natural_gas_prices 

Of course, the cure for this less than sane predicament is to get rid of pollution based electricity and replace that which is needed with renewable energy. This new trick - where the coal based electricity production is shifted across the state line so that the pathetically small RGGI fees (now around $1.80/ton of CO2, while the real "social cost of carbon (dioxide) pollution" is near $85/ton of CO2) can be avoided - well, it does not solve anything, and we are both financially and climatologically less well off for it. And it has sort have been a secret until now. Can this trick still exist when it is no longer a secret?