Friday, November 16, 2012

Snatching Defeat from the Jaws of Victory - America's Wind Energy Blowout

In Gloucester Massachusetts a pair of 2.5 MW Kenersys (100 meter rotors, 100 meter tall towers) are currently being installed at the local Varian Corporation manufacturing facility (they make the stuff that makes solar cells and semiconductors, among other things). These will generate about 9 million kw-hrs/yr (a bit more than a MW of average delivered power). Because it is being made on-site, this electricity will be cheaper than if it was bought off the grid, since they don't have to pay the electricity transportation fees to their local distribution monopoly (National Grid, an English company). Gloucester is a fairly small town near Boston, and this construction project is a big deal. And judging by the local papers, this is looked upon with great pride by the town's residents in contrast to towns like Falmouth, Mass, afflicted with mass hysteria over a pair of wind turbines located at the local sewage treatment facility, but egged on by those financing the opposition to the Cape Wind project. For more see

And there will be no hiding these turbines (top of the rotor blade circle is 150 meters, or 492 feet above ground, and these are apparently being put on a hill, too). But, rather than pay their foreign owned T&D monopoly its rather outrageous "trolling fees", this electricity will be both non-polluting and lower cost than can be obtained off the grid even with below the costs to produce it natural gas via fracking making that electricity. The lower cost is achieved  once the federal incentives (Investment Tax Credit, MACRS rapid depreciation) are added into the picture. For example, the ITC will lower the cost from $11 million to $7.7 million, and the MACRS deductions will drop the cost to less than $3.4 after a 5 year period- as long as Varian pays taxes, of course (if no taxes are paid, tax credits and tax deductions have no value, as there are no paid taxes to avoid paying). At this point (and using a 7.55%/20 year cost of money basis), the delivered electricity will cost Varian around 4.8 c/kw-hr. They may even get to sell CO2 pollution avoidance credits (RECs), which might add roughly $50,000/yr more in benefits to Varian. Varian is the major employer in Gloucester, and this investment (after they get to avoid paying up to $7.6 million in taxes) in low cost pollution free electricity will help keep this employer in business, which is very good for Gloucester. And since it is mostly working class in population, none of the insanity of "Wind Turbine Syndrome" (a made up, imaginary ailment) or the non-factual complaints that wind turbines destroy property values will crop up (see After all, Gloucester knows what really destroys property values - de-industrialization and high levels of unemployment. Too bad Buffalo NY doesn't "get the picture" and start actually making things again...

So, that is a small example of what the wind business is capable of doing for both business and the world. Those turbines will displace around 7700 tons of CO2 pollution each year. Only 582,000 more of those and the US could kick its nuke, natural gas and coal addiction. And with that sort of market demand (about $2.9 trillion), well, instead of importing 2.5 MW turbines from Germany, those could be made in the US. One of the reasons they had to import them was because it was such a tiny order (only two turbines) and there was such a rush to get big orders completed in the US this year, due to the impending demise of the Production Tax Credit/Investment Tax Credit incentives. If projects are not operating - even for a few hours - by the end of Dec 31 of this year, no incentives can be received for the one form of renewable energy capable of delivering electricity at near the cost of existing pollution based electricity generation and at humongous scale.

After all, the US generates around 475 GW of electricity, on average, and 87% of that is pollution based. About 20% is made via the extraordinarily dangerous route known as nuclear fission - in essentially 50 years of operation there have already been 4 catastrophic incidents out of the 6 known major scale partial core meltdowns. Another 20% of that is presently being made by a fuel whose present low price is the result of a decent sized $300 billion (or more) con-job known as fracking. Combined with widespread ignorance of what a fossil fuel resource (the actual mass of fossil fuels buried in some field, such as the Marcellus shale) versus a reserve (the amount of that resource that can be extracted at a given price), fracking sourced gas has made big inroads in the electricity business of late. However, at present wellhead prices (~ $3.70/MBtu) and delivered prices (~$5/MBtu), the deliverable reserves of Marcellus shale gas are quite small (less than 5% of the resource), and concentrated in a relatively few "sweet spots". In order to make that more like 20% of the resource (~ 141 trillion cubic feet, or ~ 6 years of present US usage - see, prices have to go way up to cover both the increased cost to drill and frack those wells but also deal with the associated pollution and trash disposal. And for just the CO2 air pollution from burning the methane, another 3.6 c/kw-hr needs to be tacked onto the price of gas sourced electricity (CO2 pollution at $85/ton). But, when the real Global Warming effect of the leaking methane from a fracking well (~ 7% of all methane extracted from that well), another 5 c/kw-hr should be added to fracking sourced natural gas derived electricity. So, add 8.5 c/kw-hr for Frankenstorm (like Katrina and Sandy) creating Greenhouse Gas (GHG) pollution plus 10 c/kw-hr needed to pay for the real costs of drilling and some proper waste disposal/treatment and this electricity (18 c/kw-hr) now becomes as expensive as offshore wind based electricity, and way more expensive than wind based electricity, WITHOUT subsidies.

Of course, 18 c/kw-hr electricity derived from natural gas is still cheaper than electricity made from PV panels, especially in the US northeast, which is (at least, so far), not a desert. But, if we only have ~ $3 trillion in the next decade to spend on upgrading our electricity generation to a non-depletable and catastrophic accident-proof arrangement, wind seems like the best bet around. It can be supplemented by pumped hydro storage, tidal (Bay of Fundy "underwater turbines"), biomass, perhaps ammonia/ethanol backup-powered arrangements, some biogas and biomass, in addition to existing hydroelectric schemes.

Could we actually spend $3 trillion in a decade on wind turbines and related installations? Based on how rapid we did things in WW2, Korea and Vietnam wars, the race to the moon and lots of other things both good and/or bad as well as with sub-urbanization and the interstate highway construction, no problem.

In 2012, with ridiculously complicated and convoluted incentives, about $25 billion will be put down on wind turbines to create 12,000 MW of new capacity, and about 4 GW of new, delivered electricity. We now "start" with a delivered 20 GW of wind sourced electricity, and only have 400 GW to go (delivered basis), doubling the amount laid down each year until 2016 (24 GW capacity installed in 2013, 48 GW in 2014, 96 GW in 2015, 192 GW in 2016) would get 398 GW of delivered wind energy electricity by 2020. And since 70% of all wind turbine manufacture was made domestically in 2012 (about 75,000 were employed in 2012 in the wind biz), installing 192 GW capacity (= 64 GW delivered) each year would create around 1.6 million jobs. And there is no reason other than lack of a desire to employ around 1.5 million people in this country building something new and something that makes the world a better place. Who has that lack of desire? Well, you can start with the US Chamber of Commerce, for starts...

Of course, once the pollution sourced electricity is replaced, that's not the end of the story. The natural gas used for heating needs to be replaced, and most of that will happen with electrically powered ground sourced heat pumps. Any hydrogen gas made needs to be made from either biomass or by electrolyzing water, and a new use for that H2 made would be to react CO2 made by fermentation or biomass combustion into fuels. Or it could be used to upgrade the crude fuels made by the pyrolysis of biomass into things that burn nicely and don't stink to an amazing degree. Those biomass pyrolysis compounds could also replace petroleum based chemicals, and that means less oil needs to get extracted from the ground.

Transportation needs to go either directly electric, or indirect via reduction of CO2 and biomass with renewable energy sourced hydrogen. Such fuels won't be cheap, but they won't deplete, either, and we won't have to pay off some of the most vile and evil kleptocratic dictators the world has ever had the misfortune to experience in exchange for their oil and natural gas. Odds are, we would need a price about double what current oil prices are going for to make such biofuels in usable amounts. But since oil prices will already be at that price in about 5 years, maybe that is a pretty good deal. Besides, it will employ a lot more people than will extracting oil and gas from the dregs of what remains of our oil and natural gas reserves. And if that leaves most of the coal in the ground, well, think about the jobs  balance. About 1.6 million jobs in the wind business, or 30,000 jobs in the coal business. And if you can't figure that one out, quit watching Faux News TV for a bit, and odds are your mental faculties will return..

But, alas, we will likely hear no such bold plans, or of renewable energy pricing systems like Feed-In Tariffs (FITs), which would allow $400 billion/yr of buisness (192 GW/yr of wind turbine installs) to be a viable and to succeed without tax avoidance subsidies. And also those 1.5 million new jobs plus the 75,000 existing ones that actually now exist in states OTHER THAN NY State. You heard right, of the $3.5 billion installed to date, we have around 300 manufacturing jobs, and maybe 100 warehouse/inventory jobs (better than nothing) at GE near Albany. Maybe there were some legal/banking/financing jobs created (complying with tax avoidance incentives at the hundreds of millions/project scale is not for amateurs), but those are not the real wealth creating middle class jobs that will actually pull NY State out of its economic doldrums.

Or will FITs get discussed? To make them allowable, here is the 132 words needed to update an obscure piece of legislation passed in 1978 (PURPA):

Section 210 of the Public Utility Regulatory Policies Act of 1978 is amended by adding at the end thereof:
 ‘‘(o) CLARIFICATION OF STATE AUTHORITY TO ADOPT RENEWABLE ENERGY INCENTIVES. — Notwithstanding any other provision of this Act or the Federal Power Act, a State legislature or regulatory authority may set the rates for a sale of electric energy by a facility generating electric energy from renewable energy sources pursuant to a State-approved production incentive program under which the facility voluntarily sells electric energy. For purposes of this subsection, ‘State-approved production incentive program’ means a requirement imposed pursuant to State law, or by a State regulatory authority acting within its authority under State law, that an electric utility purchase renewable energy (as defined in section 609 of this Act) at a specified rate.’’.

This is taken from the 2009 American Climate and Energy Security Act - passed by the House, ignored/filibustered by the Senate, a 900+ page tome. To make renewable energy economically viable with no need for tax avoidance subsidies, this is the ONLY part of the bill that needs to be used - no need for CO2 pollution taxes or "get Goldman Sachs richer via "Cap'N Trade" schemes" (see,934844,934904).

But if that's what gets you off and through the night, have at it - just keep that away from this tiny piece of legislation. The last time an attempt to add this PURPA upgrade was bundled in with the goodies for Goldman Sachs (CO2 auctions), it failed miserably. And didn't Albert Einstein say that to repeat what did not work and expect a different result was a definition of insanity? The good doctor was a smart one...

Oh well, only 46 days left till the wind industry goes "poof" in the US with the demise of the Production and Investment Tax Credit, just like Cinderella's ride that morphs back into pumpkin form. Sure, we have an equivalent of those spiffy dancing shoes in the form of $120 billion worth of wind turbines installed so far in our country, turning wind into electricity and avoiding the consumption of close to 1.5 trillion cubic feet per year of fracking sourced natural gas, as well as saving consumers close to $100 billion or more in the form of higher natural gas heating costs, and probably $50 billion in higher electricity costs that come when high priced natural gas is used to make electricity. And maybe it is the fault of the wind biz for not taking a decent cut of those savings on consumer gas heating and gas based electricity payments, though how that would be done is not clear at all.... But, to overcome the legal bribery from the oil, natural gas, nuke and coal business, it would have to be a big cut, and when you jump into the pig-stye of corporate funding of elections and rent-a-politician auctions, sometimes you don't emerge unscathed, and instead become transmorgified into something no longer any good. It's like those corporate polluters are infectious zombies with bad attitudes, biting and infecting with abandon.

So, what's it going to be for a future? A nice one like the folks at Varian in Gloucester are working on, or a Koch-fueled dydstopia that bears too much of a resemblance to Resident Evil... Do you really want to spend all that time and energy fending off what some nasty corporate types will deliver (such as Frankenstorms that are the cost and by-product of short term profits form the sale of pollution sourced energy) unless we set things straight? You won't always be lucky, and you wouldn't want to run out of ammo if that dystopia does get delivered, as that would give rise to serious problems...

Top Photo credit:
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