WAG - Wind Action Group Engineering

Proposed LIPA Feed-In Tariff Bills/Pilot Project

2012-01-25T09:03:00.007-05:00

A PV system on the property of the US Energy lab at Brookhaven, on Long Island, NY
from http://www.lipower.org/company/powering/solar-bp.html

Introduction
Assemblyman Fred Thiele (Independent, AD2) who caucuses with the Democrats (used to be a Republican - see http://en.wikipedia.org/wiki/Fred_Thiele) and Senator Ken Lavalle (Republican, SD1), both located at the east end of Long Island (the Hamptons) have introduced a solar photovoltaic (PV) Feed-In Tariff (FIT) proposed legislation. These bills are A7178 and S4862, and they specifically site the success of Germany and Gainesville, Florida (Gainesville Regional Utility, alias GRU) with regards to PV job creation - both manufacturing and installation. We wish them luck in their endeavor, and hopefully this very limited "testing" in NY State will be expanded. After all, this is the windiest part of NY's flat lands (only a few mountain tops/ridgelines in the Catskills and Adirondaks are windier), the offshore waters are shallow AND windy, there is an awesome tidal resource, and this part of NY has some of the most expensive electricity - especially in high demand days in the summer. Long Island holds the record for the most expensive hourly price - 99.5 c/kw-hr in August of 2006. Some PV at the time would have helped....

The Assembly and Senate Bills are apparently the same (needed for passage) - see http://assembly.state.ny.us/leg/?default_fld=&bn=A07178&term=2011&Summary=Y&Text=Y for details. As with a lot of legislation, often the language points to questions, such as what this portion actually means:

48  NO MORE THAN ONE HUNDRED MEGAWATTS OF  ALTERNATING  CURRENT  RATED
49  PEAK ELECTRICITY IS SUBJECT TO THE REQUIREMENTS OF THIS SECTION.

Discussion
In the 1970's, the Long Island Lighting Company (LILCO) monopoly decided to build a 1.1 GW nuke plant (a clone of the Nine Mile 2 unit and of the big ones at Fukushima) at Shoreham (see http://en.wikipedia.org/wiki/Shoreham_Nuclear_Power_Plant), despite the problem of no possibility of timely evacuation of the Long Island/NY City/Connecticut coastal regions if there was an accident. But, they proceeded on their own corporate version of this Hellbound Train, no matter what. The Three Mile Island partial core meltdown added billions in revamps/delays/design modifications, and LILCO still had no answer to the big "What If?" questions, especially in regards to evacuation. By 1986 - and especially with the April 1986 Chernobyl disaster freshly imprinted in their minds, over 74% of LILCO ratepayers were opposed to this $6 billion plus "platinum plated turkey". Gov. Mario Cuomo actually ordered NY State officials NOT to approve of any LILCO sponsored evacuation plans. The plant never did receive full power operating permits, and so the plant could not operate.

In effect LILCO had flushed $6 billion PLUS INTEREST of shareholder equity/company capital down the proverbial sewer, and they were the walking corporate dead. In return for agreeing to decommission the plant, NY State formed LIPA - the Long Island Power Authority (http://en.wikipedia.org/wiki/Long_Island_Power_Authority) - in 1985 via the Long Island Power Act. It acquired the assets (and debts) of LILCO in 1985, as well as the transmission system in 1988. As such, LIPA is a municipal electric utility (MEU) owned by not the Long Island ratepayers/community but by the people of NY State via the state government. A big part of their job was to pay off the Shoreham debt via monthly charges onto ratepayers. LIPA has about 3 million people serviced by them (1.1 million customers), and they are one of the biggest MEU's in the U.S. It's 2011 revenues were around $2.8 billion, mostly derived from sales of transmitted electricity averaging around 2.5 GW (initial 9 months of 2011 was 2681 MW).

In the proposed bill, only solar PV is covered. Long Island has a tidal resource of up to 2 GW with the water that flows in and out of Long Island Sound (about a 10 foot height range or more) twice every day. It also has a great wind resource onshore (the region is really flat and next to some decently windy ocean), and then there is a huge offshore region of shallow waters with an average wind speed of around 9 m/s at hub heights (see http://www.wagengineering.blogspot.com/2011/12/ny-new-years-resolution-real-wealth.html). Odds are, some biomass and biogas also could be tapped. But maybe these other renewables that are actually lower cost electricity production techniques than solar PV can be incorporated in a subsequent bill. After all, Long Island could completely power up on an average basis, and even be a net exporter of electricity to NYC, and via NYC/underwater cables across Long Island Sound, it can tap into a lot of deferred hydro or pumped hydroelectric stored energy.....

Anyway, this bill is a bridge to SOMEWHERE, and it is a start. LIPA can do this because they do not always have to choose the cheapest and most foolish/most polluting power price for any given hour, unless the management chooses to do so. They can actually incorporate human values, such as local real wealth creation, job growth and the real cost of CO2 pollution (which is more like $85/ton of CO2 pollutant per the Stern Review Report - http://en.wikipedia.org/wiki/Stern_Review), the real costs of dependence on depleting fossil fuels (alias natural gas and coal).

And of course, Long Island is smack dab in the cross-hairs of the Global Climate Change ... er .. war (of words, of philosophy, of science versus ignorance, or petrochemical greed versus our collective common good, etc). That is because slightly warmer atmospheric temperatures worldwide lead to significantly warmer temperatures over Greenland and also in the ocean waters in the Arctic Ocean and Atlantic that are next to Greenland. This leads to melting waters on the Greenland land mass/from its ice-sheets that can be a mile thick or more. The ice-melt water borrows through the ice/sinks to the land, and then flows to the ocean, in the process lubricating the land-ice interface. And this can lead to massive "landslides" of ice. Ice is also brittle - like glass, you can compress it, but you can't stretch it without it breaking. Ice sheets lubricated by a water film that are located on a sloping land mass will crack apart under their own weight, and start moving pretty fast. So within a matter of a few years, a lot of Greenland's stored ice can slide into the Atlantic, causing all kinds of misery. Notably, a 5 meter rise in ocean levels. The details can be found in Jim Hansen's latest article: http://pubs.giss.nasa.gov/docs/notyet/inpress_Hansen_Sato.pdf

That would not be good for a lot of locations, but especially Long Island, whose highest elevation is around 125 feet above present sea-level. The island is really a big sand-bar, and the eastern end is particularly flat. So, converting a lot of NY State's most valuable real estate into a fish farm is economically the equivalent of "biting the big one". Dumb on an epic scale is another polite way of putting it.

Conclusion
FITs deliver more renewable energy, more jobs and more economic growth for a given investment than any other renewable energy system yet devised, all at zero cost to the taxpayer. They democratize investment opportunities, ending the defacto monopoly of the super rich with lots of passive income. In fact, FITs will raise governmental income (tax revenue) at constant tax rates because they stimulate economic activity via by-passing useless financial gambling and risks associated with unknowable future electricity prices. And that's pretty cool.... and if it takes this baby-step on Long Island to get the ball rolling, well, why not. But, we don't have eternity to wait - the clock is ticking, and Greenland's ice is melting at an accelerating rate (exponentially so, to). So hurry up about it, eh?

DB

Your NY Electric Bill Explained - And What It Means

2012-01-20T08:33:00.011-05:00

Introduction
It now can be logically argued that we now have less freedom (= less rights) than even a decade ago - for example, via indefinite detention, "legal" assassination of Americans, (lack of) on-line privacy, the "death" of "habeus corpus" and warrantless wiretapping. And yet one local (to NY State) hard won right is the freedom to vote with the money you spend on your electricity bill as to how you want that electricity made. Do you want it made via polluting or non-polluting means? You get your choice - by a way that maximizes the probability of a Fukushima/Chernobyl event (and we've had some really close calls in NY State), or way with a zero probability of such a horror? Do you want that electricity made in a way that has minimal CO2 pollution, or maximal CO2 pollution. After all CO2 pollution (CO2 made by burning fossil fuels) is the prime driver for Global Climate Change, which will NOT be good for us, by a long shot. About 40% of the CO2 pollution made in our country comes from burning coal and natural gas to make electricity. How about electricity in a way that maximizes NY State job creation, instead of in a way that exports the maximum quantity of money (out of state corporate profits, fossil fuel expenditures/corporate rentier profits)?

Discussion
Wow, all that via that once a month ritual of paying a (usually) corporate monopoly for the monthly allotment of electricity, and which most people don't associate with freedom at all (it's a money expenditure bill, after all, and who wants to pay that!). So, let's use my electricity bill as an example of a residential bill. There are about 7 million residential customers in NY State, as well as about 1 million "commercial" and 80,000 "industrial" customers, and in 2009 (the last with the readily available data) about $22.4 billion was spent on electricity purchases (15.52 c/kw-hr average delivered price) - see http://205.254.135.7/cneaf/electricity/st_profiles/new_york.htm l. Of that, about one third of that (maybe $8 billion) was actually paid to the people who generated the electricity. And it is in that $8 billion/yr where you as a customer can choose to direct your purchases. Only a very tiny percentage of NY'ers actually do that, unfortunately.

So here is a breakdown of my monthly bill (Dec 2011), total household usage of 247 kw-hr, averaging 332 watts, all for $56.07:

Delivery Services
Connection ................................. $16.21
Delivery ...................................... $12.87 5.268 c/kw-hr
Delivery Adjustment .................. $ 4.30 1.743 c/kw-hr
Incr State Adjustment ............... $ 0.76 0.307 c/kw-hr
SBC/RPS .................................... $ 1.35 0.5452 c/kw-hr
RDM ........................................ - $ 0.75 - 0.305 c/kw-hr
Transmission Adj Rev ............... $ 0.36 0.144 c/kw-hr
Tariff Surcharge ......................... $ 1.85 5.26316 %
Sales Tax .................................... $ 1.76 4.75 %
Subtotal .............................$38.71

Supply Services
Electricity Supply ....................... $ 9.46 3.831 c/kw-hr
Merchant Function .................... $ 0.43 0.174068 c/kw-hr
Renewable Service ..................... $ 6.18 2.5 c/kw-hr
Tariff Surcharge ......................... $ 0.50 3.09278 %
Sales Tax ..................................... $ 0.79 4.75 %
Subtotal ............................. $17.36

One gripe commonly expressed about electricity bills is the "nickel and diming" those $0 to $2 per item things, that add up to 12.6% of this bill. Total taxes are about one third of the "nickel and diming" that happens when those fractions of a penny per kw-hr are added up and multiplied by 247 kw-hr. The actual generated electricity could be as low as 19% of the total bill when the "Renewable Service" (Green Tags) is excluded, which would have saved all of $6.18. It is those dollars which go to the wind turbine owners - in this case, ENI, and Italian company that owns the initial Wethersfield NY wind farm (10 x 660 kw units that were installed in 2000), in addition to the "average spot market price" for the month of December 2011, which was 3.206 c/kw-hr. Thus, ENI was raking in 5.706/kw-hr, or $14.09 last month from me, and the rest either went to NY State ($2.55) or National Grid ($39.43), our British owned local distribution monopoly whose abbreviations are, fittingly, NG (beats our natural gas monopoly, National Fuel Gas, abbreviated ever so appropriately as NFG).

In other words, 4.75% goes to NY State, 25.1% goes to the wind turbine owner who, on average, supplies my electricity, and 70.3% goes to the foreign owned monopoly who owns the wires and does the billing. Even if the cost of electricity generation was that of NYPA's Niagara Power Project (0.2 c/kw-hr) - where I would pay 50 c/month for 247 kw-hr/month - that still leaves over 75% of the (existing) bill for the "other" category unaltered.

Like most WNY residents, most of the bill for December 2011 was in the "Delivery Services" category, and not much was in the "generation" part - and that's where the pollution does or does not come from. Or that nasty radioisotope poisoning potential - Chernobyl did in or 970,000 people via cancer and related nasties, as well as significantly messing with the genetic code and immunity systems or 60 million Ukranians and Belyrusians, where less than 1 in 10 children born has a "normal" health profile. Yum.....

There are very few NY'ers who take advantage of the "electricity choice", and instead use the "default", which, for National Grid/ex-Niagara Mohawk, is heavily nuke oriented (nukes were the prime cause of NiMo's "corporate dead man walking" situation that began in 1988 and ended up in their de-facto bankruptcy/pennies on the dollar sale to National Grid in the early 2000's). Less than 1% of residential customers, and close to that for commercial (includes NY State governmental units) and industrial entities, use the "vote with your dollars" right. In theory, Gov. Pataki's Executive Order 111 (a massive unfunded mandate/wish fullfillment/empty promise), requires at least 10% of all electricity sales to NY government entities are non-pollution based (in effect, wind or landfill gas), and SUNYAB is about the only institution that even bothered to try to meet the EO 111 decree to a significant extent.

The Wrap Up
So what can be concluded from this minute/pathetic participation rate, and also the completely never budgeted (if you want it, try paying for it) E.O. 111? Renewable electricity in NY can be home-grown (recycles money instead of exporting our wealth), once installed is non-polluting, and poses zero threats from fall-out and catastrophic climate change. And for a pretty nominal cost, you can make the world a better place and provide some American's with good jobs, and businesses with a way to exist for the betterment of most of us, as opposed to extracting all available wealth and leaving us as an emptied shell in "the dustbin of human history".

Now, some will say they don't know about the "Green Tags" option (and there are better ways to do this, such as Feed-in Laws, but since we don't have them in NY, "Green Tags" are it for now). Some will just not care about trashing the climate control system with CO2 pollution - as long as today's electricity price is dirt cheap, NOTHING else matters. Some could care less about exporting dollars to import fuels and send off exorbitant profits to the mothership for NY nuke owners, and just discount the "NY Fukushima Scenario" by invoking the concept of perpetual luck.

But most people get uncomfortable when asked the question of "If your part of salvaging a viable climate for the next few generations might cost $5 to $20/month, would you do it?" - the idea of trashing the prospects of their children and grandchildren for their own short term gain and/or comfort is unsettling. It's just best to push that question into a dark corner, leave it there undisturbed, and forget about it. After all, given what comes across as news these days, (here is an rare exception - http://UpwithChrisHayes.msnbc.msn.com/_news/2012/01/14/10157366-saturday-2nd-hour-jan-14 ) it's not at all difficult to ignore the climate problem/economic problems coming from pollution based electricity. For most people, such questions will never be asked. "Move along now, nothing to see here..."

Now some will pose the "great diversions" - such as, why not tax CO2 pollution for its real cost ($85/ton of CO2 pollution emitted), and why not let nukes pay their full share of catastrophic insurance (if nuke owners had to do this, they would just shut them down ASAP, as there is no commercially viable way to do this - see http://www.wind-works.org/LargeTurbines/Nuclear%20Expensive%20and%20Uninsurable%20Say%20Studies.html). Either of these actions would raise generated electricity prices from coal by between 8 to 10 c/kw-hr and from gas by 5 c/kw-hr, rendering all more expensive than onshore wind turbines, and shocking the economy something fierce if done all at once. Actually, that's why Feed-In Laws are so attractive - all pollution sources can be replaced via the "renewables get grid access preferentially", and there is no need for cranking up pollution based electricity prices (now the bulk of our supply). In these, the more expensive (until the capital investment is paid off) renewable electricity can get blended into the grid mix in a way that minimizes the speculative rip-offs that are possible in "marginal pricing systems". But, if you can't figure out how to "vote with your money" via "Green Tags" - see http://www.buffalowind.org/node/12 - even comprehending Feed-In laws is probably going to be a stretch. And as for getting the Federal law change (alter Section 210 of the 1978 PURPA law with a measly 132 words) needed to allow a FIT system in states - well, not good. And even if that does happen (it's zero cost, after all, and not "State's Wrongs" but "State's Rights"), then try getting the NY Governor, NY Senate and NY Assembly to do the right thing. Well those all have to be done, but you can immediately vote with your dollars today, or at least by the end of the month. Besides, a big market share moves politicians, as this is actual money talking - it won't work on all of them, but maybe enough of them. Hey, maybe even the guilt trip about them trashing the world's climate so bad that their descendant's will forever curse them something fierce might change a couple of legislative minds...

In the immortal words of the Floyd dudes:

"Breathe, breathe in the air
Don't be afraid to care ...."

(Dark Side of the Moon - "Speak to Me/Breathe" - try out this one:
http://www.youtube.com/watch?v=fx6iIp-PvnY)

DB

Lake Ontario Idea

2012-01-18T13:44:00.009-05:00

See http://www.principlepowerinc.com/products/windfloat.html for details

This is a picture of a big deployment of wind turbines in deep waters, sometime in the future. So far, just one of these units has been deployed off of the coast of Portugal, in deep waters. Despite the ungainly look, these floating platforms are very stable (it was designed by former US Navy captain and close associate of Admiral Rickover (US nuclear Navy fame), who also was instrumental in starting up the US wind industry with his MIT course in the 1970's). It has been operational for about 2 months, and seems to have made it past this awesome and massive winter hurricane that slammed England with 165 mph winds. This foundation can be assembled in harbors, where the cost to do this is much less expensive than it is to assemble a wind turbine far offshore at the site where it will be used. The unit gets anchored to the ocean or lake bottom, wired up to the offshore substation/other turbines, and then its "sit back and make some money time".

It turns out that in shallow waters, it is less expensive to use other foundations. For Lake Erie, the "gravity" or "caison" one seems really appropriate - this is a 1800 ton or so concrete structure that is floated out to the site, then carefully sunk to the bottom; then the wind turbine is placed on the part sticking out of the water (these were used for Copenhagen harbor's wind farm). Another popular style is the monopole - ideal for those 5 to 25 meter depths - which is a BIG piece of pipe (now 5 meters, or 16 feet in diameter with a 3 to 4 inch wall thickness). A variety of tripod or tetrapod ("jacket") style units are good for perhaps 50 meter depths - which also need 3 or 4 smaller monopoles rammed into the seabed, with the foundation platform placed on them. And there is also the "jack-up platform", which has been used in thousands of offshore oil and gas platforms in the 10 to 100 meter range. So many options..... the judge of what will be best is, of course, the cost to do this. Capitalism at work.... along with ingenuity, skill and a need for quality done on time and at or under budget.

Foundations amount to roughly half of the price of offshore wind turbines, so economies of scale that can lower the per unit cost of foundations are important. This is where mass production can come in handy. The raw material (for example, for a 500 ton monopole), might only be $500,000 in steel, but the entire foundation system and associated labor can go for $8 million or more for a 3.6 MW wind turbine, where the total installed cost is likely to be $16 million a pop. This is not for amateurs, and big stakes can be involved with projects now typically between $1 to $2 billion. So maybe a Detroit style assembly line would come in handy.

Lake Ontario has an average depth of 89 meters, or about 282 feet, and a lot of the shallow parts of this pond are in Canadian waters, near the mouth of the St Lawrence River. Most of the 2500 square miles of the lake that is "U.S. territory", are, in offshore wind terms, "deepwater". There is some shallow water near the shore, but near the shore, wind speeds tend to slow down:
from http://www.glerl.noaa.gov/data/bathy/ont_bathy.gif

Add that to the lake Ontario wind speed map:
from http://www.awstruepower.com/wp-content/media/2010/09/NYSERDA_AWST_NYGreatLakesFS.pdf, pg 80

The brown color that is the bulk of the offshore portion of this map signifies average wind speeds in the 8 to 8.25 m/s range at 80 meters above the water. Half of Niagara, Monroe and Oswego as well as all of Orleans, Cayuga and Wayne County's waterfront has this combination of very decent wind speeds and deep water.

The normal rule is between 10 to 20 MW of capacity per square mile of water surface. Getting 2000 MW of wind capacity would thus need about 100 to 200 square miles of surface, or between 4% to 8% of the US part of Lake Ontario's surface. And that would produce around 800 MW of electricity, on average - in other words, it could readily produce more electricity than any one of the 3 smallest nukes on the NY Lake Ontario shoreline. Replacement of all of those nukes (Ginna, Nine Mile 1, Nine Mile 2 and FitzPatrick) would need about 2800 MW delivered, or about 7000 MW of offshore capacity, which would need about 2300 units of 3 MW each, or 350 square miles of offshore array. Bigger turbines would result in bigger floating platforms, though less platforms and turbines to get the same energy output.

Of course, eminently feasible, especially when the offshore arrays are connected to pumped hydroelectric storage units in the finger lakes, and also to NY City for a market for this electricity. And that gets rid of upstate NY's very own Fukushima/Chernobyl issue. Sounds good to me. Now all we have to worry about is the nukes in Ontario, Ohio and Michigan....

But the cost?!?! Well, for a bit, let's forget that somebody's investment is another person's job, and let's say the installed cost is roughly $4.5 million per MW of capacity. That's about $31.5 billion, but it can be spread out over a number of years (10 to 20, for example); let's assume 10 years. That's $3.15 billion per year worth of capital investment, or about 48,000 job-years/yr of direct jobs (assuming most of the project is sourced in the region/in state/near state. That electricity at 280 MW per year added (delivered version) would come in between 15 to 20 c/kw-hr, and it would gradually raise everyone's electricity price (but that also pays for close to 50,000 jobs), all of about 0.22 cents/kw-hr per year. Oh well that's the cost of getting rid of upstate NY's potential Fukushima problem (those are all GE boiling water reactors, too, just like at Daiichi....). And whether these are privately owned and financed (high cost version), or owned by the people of NY State via NYPA and are all bond financed (low cost version), the job creation potential is still there, waiting.

Just like thousands of upstate NY'ers, waiting for a job, or a job that depends on these primary jobs becoming a reality. Meanwhile, on the northern side of the pond, Windstream Energy (http://www.windstreamenergy.ca/), the only company to receive a FIT contract with Ontario for an offshore wind farm (300 MW one near Wolfe Island, in the shallow northeast part of Lake Ontario), is pressing on regardless of whether Ontario has a moratorium on offshore wind turbine arrays or not. Check out http://www.offshorewind.biz/2012/01/19/windstream-energy-to-build-ontarios-first-offshore-wind-farm-canada/ and http://www.offshorewind.biz/2012/01/19/windstream-energy-to-build-ontarios-first-offshore-wind-farm-canada/. They are busy lining up subcontractors and at the same time working on the Liberal and New Democrat members of Parliament (the Conservatives are a lost cause and seem terribly "whored out" to pollution sourced energy generators - is that universal or what?) with the virtues of that combination of electricity made without pollution, nuke "oops" probabilities and jobs, jobs, jobs, not to mention some perceptible increase in sales of made in Hamilton, Ontario steel. And while there is pollution associated with the manufacture the components and assembly of the wind farm, the energy payback is typically more than 30:1. One unit invested to get a return of 30 in a 25 year time frame. Who wouldn't want that?

And lastly, a word from the fishes.... Fish like offshore piers and floating platforms, and so do all the birds that depend on the fish for food, or the people who like sport fishing. Tourism... it goes well with offshore wind farms. Maybe they can even have sailboat races through the wind turbine array - more tourism. But above all, good for cows and pigs, too, as one of their favorite mottos is "eat more fish..." After all the nasty things we have done to Lake Ontario and it's aquatic residents, can't we at least be nice to them and provide some happy hunting waters for Lake trout and similar big boys....

So, support your local lake trout! Get an offshore wind farm located in a Great Lake near you. And hurry up about it, while we still have a viable climate that let's trouts live in the Great Lakes......

DB

2011 - The World of Wind Energy Part 1

2012-01-11T17:13:00.007-05:00

From http://www.city-data.com/city/Sheldon-New-York.html - after all, no city webpage is complete without a nifty picture of a wind turbine in town (you also can click on http://www.city-data.com/picfilesc/picc50574.php). This is one of the "Sheldon High Winds" 75 unit array (a GE 1.5 MW x 77 meter long blade on an 80 meter tall tower) in Sheldon, NY, near the Wyoming/Erie County border. And it's just so darn cool looking.... as well as partly powering up the very device you are reading this article on if you are in the Western NY area when this is occurring. And, as Mylie Cyrus is rumored to say, "And that's pretty darn cool, too..." BTW, hey City of Buffalo government, what's the problem here? When are you going to join the 21st century?

Anyway, 2011 is gone, and for many of us, we want to keep it that way. The pretty poor economic situation around here does leave one hoping for a better 2012, though in theory, it could be worse (after all, in January 2009, the economy was shrinking at a 7.5%/year rate or more and three quarters of a million Americans were losing their jobs per month - eeks!). But, despite the less than desirable economic situation, it looks like about 45 to 50 GW of new wind capacity (worth about $US 70 billion) was installed last year worldwide, bring the worldwide total to near 245 GW (a GW is a gigawatt, or 1000 megawatts (MW)). If every country had the wind turbine performance of the US, that would be about 73 GW of average delivered output, or the equal to 73 Nine Mile 2 nukes (for 2010 anyway). So, still think this is a trivial pursuit of some idealistic hippies (and yes, that is so true) and no one else? Of course, not every country has such a wind turbine performance (China is a total slacker in that regard, and they now have about 25% of the world's wind turbine capacity, with almost all of that "Made in China", too). But even with that caveat, wind is a big source of jobs, economic development, invested wealth as well as delivered electricity made with no possibility of "nuke belch" or CO2 pollution, and depletion of the resource is not a real issue.....

In the US, about 8 GW was installed last year, bringing our total to about 46 GW capacity, and a delivered average of about 14 GW, or 14 nukes that deliver 1 GW. All indications are that over 10 GW will be installed in 2012, as developers rush to get their projects finished before the Federal incentives disappear on December 31, 2012. Consider that to be "Pumpkin Time" in a renewable energy version of Cinderella.... More and more of the ones installed in America are being made in America, even if a lot of the companies making them are European (Vestas, Gamesa, Siemens, REPower, Nordex) or Indian (Suzlon). More importantly, the supply chain is filling out. Making wind turbines is very metalworking intensive (sort of related to cars, trucks and locomotives), and states like Michigan and Ohio are pursuing these opportunities intensely, as are our neighbors in Ontario and Quebec.

As for NY State, still pretty much zip-ola on the wind turbine manufacturing jobs front; that is where most of the jobs associated with the wind biz are situated and the most desirable ones as far as economics are concerned. It appears that the NY State capacity is now near 1350 MW, and will be close to 1800 MW by the end of 2012, delivering more electricity than the rated capacity of the Huntley (400 MW) coal burner (though there should be to replace the output of the Dunkirk unit (540 MW)). 1800 MW of wind turbine capacity is roughly $3.5 to $4 billion invested, and there SHOULD be a lot of manufacturing jobs associated with that, but NY State officials have instead stressed the pollution-less electricity made, the avoided fossil fuel combustion (essentially, all natural gas), the avoided CO2 pollution as well as the construction and installation jobs that temporarily were needed to install the roughly 900 turbines so far. At present, that is of SECONDARY importance; manufacturing job creation should be of PRIMARY importance, as that leads to other permanent job creation. Oh well, instead, we stress the booby prize, the "Miss Congeniality" award of economic development, while Ontario, Quebec, Michigan, Ohio and even Pennsylvania have their eyes on the real prize...

World wide, Europe again installed about 10 GW (total now near 90 GW), and the average size of new onshore turbines is evolving to a 3 MW per turbine rating. Europe is now the technological leader in this field - it is where India and China buy and/or steal most of their wind technology from these days. Over 1 GW of offshore wind capacity was installed, and 5.5 GW was under construction, with over 200 GW "permitted" or "under consideration"; this sub-field is set up for rapid exponential growth, with 40 GW anticipated to be installed by 2020. Europe has targeted offshore wind as a major business/job growth sector, with about 150,000 people anticipated to be employed in it by 2020. The decision by Germany to cancel its nuclear option after the first Fukushima reactor hydrogen gas explosion has intensified the offshore push. Furthermore, the strong connection between the high skilled, high quality manufacturing sector employment and wind turbines is firmly established. Any attempts to impede wind turbine development will now get an intense push-back from the banking/finance sector, the business sector and organized labor, as well as the "enviro's".... The design of a North Sea "super-grid" of at least a 10 GW rating to move the offshore derived electricity to all of Europe is also underway (also a great Keynesian-like economic stimulus...).

China has manufactured another 20 GW of wind turbines in 2010 (see http://www.worldfutureenergysummit.com/Portal/news/4/9/2011/world-wind-energy-association-report.aspx), bring their total to 65 GW. However, over 20 GW of that has yet to be connected to the grid (the turbines are installed, but not wired in...). Of the turbines that are grid connected, the average output is in the 11% of capacity range (about 38% of the US average, or less), and this is not due to them being installed in poor wind regions. Most of this problem is due to either poor grid quality and/or especially poor manufacturing quality. Part of this is a result of China's reason for making and installing these - they want steel, concrete, machine tools, the components (generators, gears, transformers, transmissions, bolts, rebar, etc.), concrete and labor to be consumed, and they really don't care what the end result is, though they really would prefer that it was exported. But since much of the technology of their turbines is either licensed or stolen and is of poor quality, their export options are limited. One "niche" they are pushing is the use of permanent magnet generators (PMG), which are slightly more efficient than "doubly fed" electromagnet based generators, since the preferred magnets are rare earth based (especially neodynium based - the so-called NIB materials - see http://en.wikipedia.org/wiki/Neodymium_magnet). However, the main benefit of PMGs is that they can be used in "poor quality grids" and that they can be started up without an initial use of grid-based electricity needed to magnetize the rotor electromagnet in the "doubly fed" generators (and China has significant grid quality issues). Another issue in China is electricity cost - since they have essentially no pollution control costs (no controls, filters and scrubbers - no cost!) on coal based electricity, it is very cheap (so is the labor to extract this coal; coal mines in China can be worse than horrid prison camps). Manufacturing things that use a lot of electricity (especially solar panels) can be really low cost when the electricity is low cost, and lower cost than everywhere else (labor, pollution control and electricity, especially) is an essential core part of the Chinese mercentilistic export strategy (i.e. drive everyone else out of business/monopolize the business/keep restive populations busy by working them hard at barely survival wages).

So this is a bit of a problem for China. They need electricity production to grow, and wind turbines can supply this at ~ 6 to 10 c/kw-hr, and it uses neither coal or natural gas in the process. China has arrived at "Peak Coal" - they now must import some coal from countries like Australia, Indonesia, Mozambique, South Africa and the U.S. to make up for what they cannot produce domestically. And China mines a lot of coal, but they burn even more. Coal is a depletable resource, and China is burning through the easy to extract coal at a prodigious rate - over half of all coal consumed in the world is burned in China - mostly for electricity, heat, steel and ammonia production. China now competes with India (who can only supply about half of their needs) on the world market for coal. This is why U.S. east coast coal prices are now $80/ton versus $50/ton these days; China and India now import coal from the U.S. (mostly east coast) at a rate of close to 150 million tons/yr - or 15% of all coal produced.

Wow, what a trade - we export coal to "Chindia"and import Walmart sold manufactured crap from "Chindia", as well as iPhones, TVs, tools, iPads, computers, apparel and shoes as well as solar panels. China would love to add wind turbines to that list, but there is the quality problem, which they hope to overcome via using cheap Chinese sourced credit (in effect, another Walmart curse - the profits from the cheap Walmart crap are used to finance purchase of made in China wind turbines..).

Development Trends
One nifty world wide trend is that wind turbines are going world wide - such as Brazil's 2011 big bulk purchase, the developments in one of Mexico's "wind tunnels" (Oaxaca), South Australia's wind surge and the recent Morrocan 850 MW tender. FYI - India now has 14 GW of installed capacity, and they are also headed "offshore", where their mediocre land based wind resource can be significantly augmented. South Africa also recently announced several new wind projects (coinciding with the Durban conference). Canada is also developing at least 1 GW/yr, and that will accelerate with Ontario's FIT pricing system (and now, Nova Scotia).

In general, wind turbines have been getting both bigger and more dependable. Except for China, competition between manufacturers, combined with Feed-In Tariffs, is pushing the technology in many good ways. Of late, Low Wind Speed Turbines (LWST), which can be roughly classified as having a power ratio (swept rotor are divided by generator rating) of 4 m^2/kw or more have been accounting for significant sales. Augmenting those are "medium wind speed turbines", with a power ratio between 3 to 4 m^2/kw; they have been getting larger, and offshore versions of these are now offered (such as the Siemens 3.6 MW x 120 m rotor diameter model, and the Vestas V112). Many manufacturers now offer turbines for onshore installation of 3 MW or more (Siemens, Vestas, REPower, Enercon, Gamesa, WinWinD, Fuhrlaender), and the 2.5 MW size is now COMMON. In the U.S., towers taller than 80 meters are now available (these go with LWST and bigger rotors). In 2012, some may even be "hybrid towers" that are common in Europe - a lower concrete section and an upper steel, one, with heights of 100, 120 and 140 meters available.

Finally, there is the real push to make onshore wind a major factor in Europe. Wind speeds average over 9 m/s in much of the North Sea (and often greater than 10 m/s), and above 8 m/s in much of the Baltic Sea. Since the amount of power production is proportional to the cube of the wind speed, a given region at 10 m/s can provide over 4.6 times as much power as can a zone with a 6 m/s wind resource, for the same rotor area. Plus, transporting big blades and towers is easier by water than on land, and in general, there are no neighbors offshore. Offshore wind has been demonstrated for over 20 years at commercial scale, and the challenge has been with foundations, underwater cables, offshore transformer stations as well as making and installing these on time and under budget. In general, that is NORMAL now, unlike for nukes, where cost over-runs seems to be the rule and not the exception. Offshore wind derived electricity is now cheaper than making electricity with a new nuke, and after Fukushima...

The full effects of the Fukushima disaster on Japan have still not been felt. TEPCO, the owner of the Daiichi complex, was one of the biggest companies in the world, and now it is "the walking corporate dead" - bankrupt in practice but not allowed to be on an official basis. Too bad the Obama Administration has yet to get the message...... However, the ongoing disaster has spelled the practical end of nukes, and wind energy is still between 5 to 10 times less costly than solar as a way to make mass quantities of electricity. More importantly, no private consortia will finance nukes (which cost over $10 billion per unit and take close to a decade to make). Odds are, Japan will soon see an enormous push for offshore and onshore wind energy development to replace out their nuclear and fossil fuel sourced electricity.

As for the U.S., "Pumpkin Time" (December 31, 2012) is fast approaching, and the delay in either replacing the tax avoidance based subsidies with a sane pricing system or else extending them is likely to cost 30,000 jobs, at least, starting in 2013. Until that situation is rectified, many of the remaining 40,000 people employed in the wind biz will also be endangered, as will be many of their employers. All because Republicans in general and the "teahadist" branch in particular put either their ideology (can't delay the Rapture, belief that there is no such thing as Global Warming, belief that what's good for the 1% is good for them and the rest of the country, and loyalty to those who buy and/or rent them via campaign contributions) or their belief that bringing our country to its economic knees will allow a Republican to be President and allow Republican control of the Senate and the House in the 2012 elections, above that of our country. In other words, the needs of a few outweigh the needs of the many. Well, obviously, they are no fans of Vulcan (Star Trek) morality, even if the Texas Supreme Court once was... (http://www.techdirt.com/articles/20101027/05183111607/texas-supreme-court-cites-the-wisdom-of-spock-on-star-trek.shtml)

Anyway, the official numbers will come out in early February, and they will show how the rate of wind turbine installations is still increasing (GW capacity installed per year), despite poor economic prospects. Last year, the amount of wind power installed (capacity or net produced by this new capacity) was greater than the nuke installs for 2011. In the U.S., wind turbine produced electricity is significantly cutting into sales of (and the probability of a higher price for) natural gas. The avoided gas amouts to almost 1 trillion cubic feet of methane per year, or over 4% of that consumed. And that is definitely enough gas not burned to affect natural gas prices in a major way, and one beneficial to most gas customers, too. Viewed another way, this is close to 14 x 1.1 MW nukes that did not get built, and that is a good thing, too. It sure beats having to get a full body scan for radio-isotope ingestion as will be the norm in Japan for annual doctor visits....

What would really be nice for 2012 in the wind biz is for the general public to understand the combination of the job creation potential of the mass production of wind turbines (say, at a rate of 10 times what was done this year) coupled to our country's enormous wind energy potential. Or that certain environmental organizations (it's too large a list) would join with the Sierra Club and understand the the job issue is of far more immediate importance to most Americans than is the longer term threats posed by elevated CO2 levels, or of the health effects of wide scale fracking and continued wide scale use of coal when we could be using a combination of wind energy and pumped hydro storage. Heck, maybe even the NY State government could figure out the potential of pumped hydro in NY State for Ontario, Ohio and Indiana....

Oh well, I guess a person can wish...

DB

Macroeconomics, WNY and Wind Power

2012-01-05T08:47:00.015-05:00

Graph by Jerome Guillet, from http://www.eurotrib.com/story/2011/12/19/121933/16

Long Introduction
Macroeconomics is so important, and generally so misunderstood, especially by right wing economists and associated business types. But rather than launch into the topic full tilt, there are a few important aspects of it that are relevant to Western New York, the US and the world at the present time, especially since we are still stuck in the effects of The Great Recession that George "Evildoer" Bu$h and Alan "Bubbles" Greenspan helped bring in and which metastasized in such spectacular and undesired fashion in the fall of 2008.

1. The present period is characterized by a lack of economic demand (alias macroeconomic demand). Increasing the supply of stuff (labor, materials, etc) will do little good and may do more harm. When the workers who make (or in our case, used to make) things cannot afford to buy them, you've got trouble, big time.

2. Our society runs on energy, among other things, and especially oil based energy (oil is used for almost all forms of transporting people and things). At present, replacement of oil usage is very difficult compared to coal, natural gas and nuke replacement, but, "ya gotta do what ya gotta do". The price of oil has been rising at an average rate of 14.6%/yr for that last 14 years, and there is no logical or truthful reason to believe this trend will do anything but get worse. And we export close to $400 billion a year to import about 10 million bbls/day. This acts as an additional regressive sales tax (and increasingly onerous one, too) on lower and middle income people. World oil prices (and US domestic oil prices) are set not by the total oil produced in the world but by the fraction of oil available for export (about 50% of total oil produced). Global Net Oil Exports are declining (a drop of 10% in the last 5 years) and this rate will accelerate as time marches on... Natural gas prices can also act like regressive sales taxes on most people, but for now, prices have collapsed. However, that situation will not last for too long, and so the more we can avoid getting hooked on natural gas (especially for electricity), the lower the demand will be and thus the lower the price will be. Lower demand is the way to keep gas prices down.

3. At the present time, if you tax rich people more and spend the money on infrastructure or in transfer payments to the poor, this will stimulate the economy.

4. If present spending levels by governments (federal, state, local) are decreased without a corresponding increase in spending by the private sector in this country, that will depress our economy; doing the opposite (increased government spending on poor and middle class people) while private spending/investment stays the same will stimulate our economy, especially since we are "macroeconomic demand deficient" these days.

5. If you tax poor and middle income people (in effect, the bottom 95% and especially the bottom 80% of the income distribution) more, or do things like raise the cost of the oil and natural gas they buy without also raising their income, this will depress the economy.

6. Income and wealth distribution does affect macroeconomic performance. A more equitable/less unequal income distribution will lead to a better performing economy (less unemployment, more GDP/person, more stability in economic performance), and a more unequal income distribution leads to a lower GDP/person ratio, higher unemployment and a more unstable economy. Greater inequality will eventually produce drastic "corrections" - more severe recessions/depressions than would happen with more equitable income distributions, and more often, too.

7. These "lack of macro demand" recessions and depressions can actually INCREASE inequality, setting up the next recession/depression, and also increasing the likelihood it will be worse than the preceding one. Bummer!

8. When income and wealth distribution become too obscene, stuff hits the proverbial fan. Drastic inequality can only be maintained by brute force and strenuous media control (Remember the book "1984"? Well, there are corporate versions of a totalitarian state, too - for example, see Naomi Klein's book "Shock Doctrine"). After all, do you want to live in abject poverty, work like a slave or worse so that some freeloading parasite of a corporate overlord can indulge in their wildest luxury fantasies (food, intoxicants, choice selection of "pleasuring opportunities", etc) just because they are a member of what radio and TV show star Ed Schultz calls "the lucky sperm club"?

9. Inequality tends to produce more inequality, especially on the rich side of the ledger. For example, when major money buys media access as well as media ownership, the media/money arrangements buy and/or rent political power, and political power helps determine income as well as wealth capture/distribution/retention, this sets up a positive (for the well off) feedback loop. In addition, when the vast majority of societal wealth is captured by a small minority for an extended period of time, well... do the math .... that means there is less for the vast majority of people.

10. People tend to resist getting further impoverished. Generally speaking, getting poorer is not one of the main ambitions in life for most people, especially since getting poorer means an increasing probability of dying earlier (medical, type of food, crime, etc) than for the wealthy, as well as a higher probability of a less pleasurable life. And if presented with the option of decreasing real wages/standard of living or taking out a loan to maintain current/prevailing living conditions, people often go the loan route, at least until they cannot pay back the loan or even just pay the debt service (interest portion of the loan).

11. When the vast majority of the population are also debtors and when they can no longer even pay the interest on those loans, those who were doing the loaning (the wealthy) have to get hosed, eventually. It's just simple math..... Unless debtors are allowed to earn more money (and hence the vast majority of the population are allowed to earn/collect a larger fraction of the national economic output), the math result will come home to roost with a rip roaring recession or depression, or worse. While most people associate the Rwanda and Bosnia civil wars and genocides with tribal and religious disputes, there also were intense economic causes for the squabbles over the local resources that may have been MORE important that the "surface cause" of religious/ethnic bigotry. After all, the "winners" get to keep the land, while the "losers" lose it all, including life itself.

12. Real wealth is created through farming, mining and manufacturing; stealing only works until the "distant hosts" have been pillaged to the point where there is nothing left to steal. Financial activities do not create wealth, they only rearrange wealth, and too much of this activity and too little real wealth creation is eventually unstable. And that appears to be where our country is at at the present time.

Short Discussion
Point #1 should be as obvious as the nose on your face. If you have problems with that one, perhaps medical help is in order, though this does PERSONALLY affect different people in varying ways. Some people are getting by remarkably well, and some businesses may be experiencing a high demand for their goods and/or services - cool. Unfortunately, for our society as a whole, we could be doing SO much better.

The data for Point #2 (and the graph below) is from the U.S. Government Energy Information Agency, and it is based on the "West Texas Intermediate" (WTI) oil price (now artificially lower than most other oil prices for some pipeline related issues). In general, most crude oil prices (especially the Brent index, which is made possible via an exchange operated by BP (British Petroleum) and Goldman Sachs) are now higher than WTI by at least 10%. The starting year (1998) is somewhat arbitrary, but prices from 1984 to 1998 were remarkably flat, and from then on, that is no longer the case. The growth rate in price is obtained by getting the slope of the best fit equation of the natural logarithm (Ln) of the price versus the year:

First Order Oil Price Rise Rate Calculation (for those not engineers or math savvy)

The lower graph is the conversion of this growth rate equation into a "normal" format, in this case price (y axis) versus time (x axis), and then projecting this onwards. On average, a 14.6%/yr growth rate for crude oil prices means that they double every 5 years. And now you can't say you were not warned! And while the graph is a bit noisy, keep in mind that it is the long term effect that you have to worry about...

Next, here is an excellent article documenting Points 3, 4 and 5. It's just plain awesome:
http://www.dailykos.com/story/2011/12/30/1049892/-Occupy-the-tax-code:-why-taxing-the-rich-will-make-the-economy-soar?via=spotlight. There is also a corresponding (and even stronger) relationship between income distribution and job creation - see http://www.dailykos.com/story/2012/01/05/1051834/-Occupy-the-tax-code-II:-exploding-the-job-creator-myth?via=spotlight. So, those yahoos promoting that "yahooey" about the rich getting richer faster will lead to more job creation than by taxing them more - that is SO "fact-free" and all that is implied by that phrase. But, that is hardly surprising....

Of course, such facts are heresy to the present Republican "economic belief system" (alias bogus psuedo-religion, and which seems to trump even the hard core Christian fundamentalism of many of them). Bottom line - taxing the wealthy while not taxing the non-wealthy at the present time is the smart thing to do. It will get more people employed, raise more tax revenue, lower Federal debts, and allow many businesses to make more profits, hire/retain people.

Next comes the income distribution problem , especially in the aftermath of asset bubble burstings - "It's the Class War, Stupid!": http://www.eurotrib.com/story/2011/12/19/121933/16. The graph at the top is from this excellent article. It shows how the asset bubble process transfers wealth from average people to the "upper echeloners". And that process as also not a good thing.

Another, more lengthy examination of this effect can be seen in a paper published by, of all entities, the International Monetary Fund (IMF), who have a long history of afflicting the afflicted/poor/working class and enriching the rich. Well, irony abounds, no doubt about it, and this is a great example of this. In general, they (the IMF and "friends") tend to fleece second, third and fourth world countries something fierce, but nowadays, looks like they are about to help impose "Austerity" on much of Europe, which will only make things worse, and further increase the debts of countries like Greece, Spain, Portugal, Ireland and Great Britain. However, maybe the ruling apparatchiks of the IMF don't read the research papers that they publish.... See http://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf. A brief description of this 30 page paper (hint: avoid the equations, stick to the writing and graphs) can be found here:
http://www.declineoftheempire.com/2011/02/inequality-debt-and-financial-crises.html.

Conclusions
So how do we stimulate demand while at the same time not stimulating significantly greater oil imports and natural gas consumption? Well, things like mass US manufacture of and subsequent installation of wind turbines, construction of pumped hydroelectric energy storage systems and installation of additional grid transmission capacity would be a start. In general, this will displace natural gas usage, but after a while, even coal and nukes will get replaced with wind. At the end of 2011, both South Dakota and Iowa were supplying an average of 20% of their electricity supply, and in parts of Colorado, more than 50% was supplied by wind for significant periods. But, that trend needs to be replicated for big load centers/population centers.

Another thing to do is making alternatives to gasoline consumption, and hence oil importation needs. This would include both electric mass transit for urban centers and also electrified freight rail for long distance freight lines (and which also provides the long distance transmission corridors from the Great Plains to the east, west, south and north coast population centers). And building new roads (for more car traffic) should not be encouraged. The prime strategy for eliminating oil imports should be to use less oil (domestic AND foreign) - less diesel for trucks, less gasoline for cars and less kerosene for jet aircraft. While domestic oil extraction and renewable fuels production is helpful, the best bang for the buck is better fuel efficient cars and avoidance of using gasoline consuming cars and diesel consuming trucks.

And finally, there is the replacement of natural gas usage. As stated earlier, the electricity generation part can be replaced by wind turbines, but what about the heating issue? It turns out that wind turbines (electricity) can replace gas used for room temperature space heating via heat pumps - groundwater sourced ones are preferable (more heat "pumped" per kw-hr consumed in the compressor). Over half of the natural gas consumption in this country can be avoided by any combination of heat pumps, passive solar thermal, better building insulation and solar hot water heaters. And that will insure that natural gas prices stay low, and thus do not add more economic woe to poor and middle income people.

Residential and commercial building heat pump manufacture can be like the car industry, too. Maybe that should be the next Buffalo target - an auto plant sized heat pump factory....

There are millions of jobs to be had for the next two decades or more with just these few examples. But to be effective, the manufacturing part can't be off-shored; imports of these need to be viewed as morally repugnant, as well as economically "stupid on steroids". The solar PV industry in particular needs to be based on made in USA PV cells/modules/systems; using Chinese slave labor and mercentilistic capital to provide "cheapies" is so unpatriotic, and such a job killer, when job creation in THIS country needs to be stressed.

And while some will stress replacement of coal burners and nukes, that can be done after the gas based plants (also most expensive) get replaced. After all, very few new coal and nukes are being installed, and are likely to be installed. Nukes are just too expensive, and they CAN go Fukushima on us. New coal burners are also expensive, and the price of coal on the east coast is just no longer predictable (Chinese and Indian purchases have added at least $30/ton onto prices in the last year). The combination of affordable electricity and job creation pretty much targets wind, geothermal, tidal, biomass and biogas as to how the bulk of our electricity needs to be made.

Oh well, that's at least two cents worth of advice. What's your opinion(s) on this? After all don't forget to

the public conversation as we certainly cannot leave that to the corporate owned media around here. Talk about a proven to be a brain deadening concept...

DB

NY New Years Resolution - Real Wealth Creating Jobs, En Masse

2011-12-26T11:41:00.025-05:00

from http://www.windpoweringamerica.gov/windmaps/offshore_states.asp?stateab=ny - your tax dollars at work

Introduction
There are many famous sayings with respect to "too late". A classic is "shutting the barn door after the horse has got out". Or "better late than never", even if "it's all for naught but still for show". And that brings us back to the subject of offshore wind turbines and NY State. As you may recall, there was an initiative called the Great Lakes Offshore Wind (GLOW) project, which got canned this fall by the New York Power Authority (NYPA), or at least the NY State part of GLOW. The cancellation had a lot to do with political intrigues and personality clashes in the upper realms of NY's political bureaucracy and especially in that pot of gold known as the People's Power Company of NY - alias NYPA. NYPA is owned by the people of NY State via our state government - it is the biggest municipal electric utility (MEU) in our country. And due to the Niagara River and St Lawrence River power projects (NPP and FDR Dam), it produced an average of about 2200 MW of electricity at a cost of less than 0.2 cents/kw-hr, or about 7% of the low, low cost that NRG makes electricity at the old (76 years and counting) Huntley facility (COST is about 3 c/kw-hr, but that is not the PRICE that it gets sold at - the price is a bit of a random value). Note: NYPA also makes other electricity, but most of it is more costly to make, such as the natural gas sourced energy. And the electricity made at Huntley is made cheap, especially compared to natural gas sourced electricity. This low cost hydroelectricity is highly sought after and the subject of a lot of fighting over it, as well as impressive displays of ignorance on behalf of many local politicians, economists, businesspeople, the general public, too. More on that, in a bit...

Discussion
Some of this super-cheap hydro-power is sold at cost (transmitting it costs about 10 times what the manufacture of it costs at these largely depreciated facilities) - mostly to municipal electric utilities in NY and 6 neighboring states, and some to local industries around here. However, some of it gets sold at "market rates", which can also be called "NYISO spot price", or "NYISO price". Last year the NYISO price in WNY averaged 3.92 c/kw-hr, so a tidy profit was made on this - for example, on the 58 MW average production from the Lewiston "pumped hydro" attachment to the Niagara Power Project, which acts like a giant battery (equivalent to around 4 million car batteries (100 amp-hr ratings)). Whatever electricity that is made but not allocated via a contract with a MEU or an eligible business can get sold at the NYISO rate, which varied from 1 c/kw-hr to 12 c/kw-hr last year in WNY, and that essentially all translates into profit for NY State via its NYPA subsidiary.

Anyway, a couple of months after the demise of NY part of GLOW (see http://www.wagengineering.blogspot.com/2011/09/offshore-wind-revisted-in-2011.html), along comes a bunch of well meaning people and well meaning organizations advocating for offshore wind development near Long Island - see http://www.offshorewind.biz/2011/12/22/new-yorkers-push-for-offshore-wind-power-usa/. Sure, they hit all the right buttons, and are to be commended for the general focus on job creation, but, the time for these sentiments was a few months ago, and doing this now is .... what? Maybe this is for show, or maybe regret at seeing the massive job creation going in in Northern Europe with their offshore wind energy efforts contrasted with the whole bunch of "nothing" going on in NY State? And that "nothing" includes no manufacturing jobs, no business opportunities, no investment banking, no marine construction jobs in the offshore wind biz, and lots of opportunities for environmental destruction via the "Swiss Cheesing" (fracking) of much of upstate NY. At a minimum, offshore Long Island will be much harder to do, as this is the THIRD attempt, and the unspoken hurdle to be overcome is "are you really serious, or just pretending, AGAIN?".

For example, before this can be seriously considered, somebody is going to have to put a deal with the purchaser(s) (for example, LIPA and/or Con Ed) for a fixed price/long term supply of electricity, the developer, their suppliers, engineering and environmental consultants, the project managers/planners/schedulers, the equity investors (typically 30% in Europe) and the bank consortia (which also means putting together this consortia, typically in for 70%). This offshore deal would involve over $1 billion INITIALLY, and to make any sense, it has to be a part of a continuing program of offshore wind projects. Just putting this deal together will cost lost of money, and involve facilitators (also highly compensated) such as these: http://www.green-giraffe.eu/uploads/111201%20GGEB%20presentation%20EWEA%20Offshore%20Wind%20-%20Show%20me%20the%20Money.pdf. These people have far better things to do and real money-making opportunities to pursue than another snark-hunt equivalent which has been the two previous offshore NY "adventures".

After all, placing big wind turbines in the Atlantic Ocean in 30 to 50 meters of salt water subject to the occasional hurricane and 60 ft tall waves is not going to be cheap, nor will the electricity made by those turbines be cheap until the investment is paid off in 20 years or so. At least Lake Erie is generally less than 30 feet deep, alkaline fresh water and waves have never been reported to be more than 15 feet (30 feet peak to trough)...... Well, that 500 MW worth of projects (one of which could have been on Galloo Island in Lake Ontario, and thus pretty inexpensive) would have provided a nice "base" of suppliers, labor, consultants and engineering for the more difficult Long Island adventure, but, no go. Yes, you might need different models of turbines for the slightly less intense Great Lakes winds versus the slightly more intense Atlantic Ocean winds, but that's not a big deal - large wind turbines are customized somewhat to the wind resource. Now the Long Island project will be even less job creating, more expensive and more improbable WITHOUT the GLOW projects.

from http://www.offshore-power.net/Files/Billeder/scrobyaerial.jpg, the 60 MW Scroby Sands project in Great Britain (also owned by RWE)

If you look at the wind map at the top of the page, you will notice that the winds to the south of NYC and Long Island are in the 9 to 9.5 m/s range 90 meters above the average water surface (orange) or 8.5 to 9 m/s (purple). That is a righteously great wind resource, and with the correct turbines, would translate into at least a 45% net output for a set of turbines. At 9.25 m/s average wind speed, the probability of the turbines not making some electricity is less than 10.42%, while the chances that the wind speeds are too high is less than 5 hours per year. This covers about 4100 square miles on the wind speed map. And since about 10 GW of electricity is consumed in NYC and Long Island, and a decent sized (for example, the Nordsee 1 ~ 1 GW array - see http://www.rwe.com/web/cms/en/288766/rwe-innogy/sites/wind-offshore/developing-sites/innogy-nordsee-i/) offshore wind farm has a power capacity density of about 6.9 MW per square kilometer (average of 17.7 MW/mile^2), that means about 1255 square miles of water surface would need to be tapped to supply, on average, ALL of Long Island and NYC's electricity needs. At an average of 5 MW per wind turbine, that's 4445 of these. And, at $4.5 million per MW of capacity, a cool $100 billion would be needed. Of course, if 2 GW (delivered basis) of tidal turbines (no dam/barage needed) was employed, only about 1000 square miles of ocean would need to get tapped (tidal and offshore wind systems have comparable installed costs, though tidal turbines are still in the "rookie" stage. See http://www.offshorewind.biz/2011/12/26/european-marine-energy-centre-receives-hs1000-tidal-turbine-uk/:

from Hammerfest Strom, the manufacturer; this picture is of their 300 kw pilot unit that has been tested for 5 years in 50 meters of water (http://www.hammerfeststrom.com/products/tidal-turbines/hs300/). Yes, they are coming, and the big question is where they will be manufactured, and who will deploy them. Very fish friendly, too....

So, a nice $100 billion project, equivalent to 1.6 million jobs years, if we play our cards right, or about 80,000 direct manufacturing/construction/engineering jobs if conducted over a 20 year time interval. Odds are, the delivered electricity price would be less than would be the case if natural gas was used to make this 10 GW of electricity over the next 20 years, let alone the next 45 years. After all, prices for NYC/LI electricity would not rise significantly for 10 years, since the fraction of offshore sourced electricity would only be a small part of the supply mix until the 10 year mark is reached. And if you can predict what the price of natural gas would be in a decade from now, maybe you should also be continually winning big bucks from the NY Lotto .... as the only answer that makes sense for average future natural gas prices is "higher". Besides, those 80,000 jobs will spawn up to another 400,000 ones (the job multiplier effect).

Anyway, that quantity ($100 billion) money is now not a problem - after all, there is at least $2 TRILLION in corporate cash stashed in funds earning between 1%/yr to 3%/yr OR LESS in interest. That means that such a Long Island project would be putting less than 5% of that to work over time, but probably less than $5 billion/yr (for 20 years, that's the $100 gigabucks). And this is not money poured down a black hole, like it was for the $800 billion wasted (so far, but more expenses as the medical and other bills pile up) in the IraqNam FUBAR. This invested money would actually pay back the investor via sales of electricity, amortized over at least a 20 year period. A 7.5% ROI would be a big improvement on what they are in effect, paying people and hedge funds ("hedgies") to hide/handle. And of those 80,000 jobs, about 70% of them actually have nothing directly concerned with the wind turbine manufacture, too - most of the jobs would be associated with the foundations, construction and electrical transmission aspects. But, it would be a job creation machine the likes of which NY has not seen since WW2. And unlike the bankster jobs on Wall Street, these actually make the world a better place, and don't merely rearrange existing wealth mostly into the hands of some already really really rich people. oops, sound a bit like this article: http://www.dailykos.com/story/2011/12/18/1046522/-How-the-GOP-stole-America?via=blog_1.

Oh well, I guess people can dream; maybe that is what the new promoters of offshore Long Island are doing. But why just limit it to one spot in the state, which has weather patterns that tend to be different at any given time from eastern Lake Erie and Lake Ontario. Spreading out wind farms over a wider area (and especially to areas with different weather patterns) means that less energy storage facilities have to be built for a given average delivered quantity of electricity. And here's something to think about - we have 800 MW of extra transmission capacity available in the Dunkirk, NY region, without any upgrading (such as via thicker wires, and upping the voltage from 230,000 volts to at least 345,000 volts). One new line from Dunkirk to Buchanan, NY (present site of Indian Point) could easily replace at least one of those nukes, and a pair of them could replace both of those pesky nukes. And, of course, this could interconnect several pumped storage potential sites in the Finger Lakes and Southern Tier. Such projects are also great for job creation, and these also will help staunch the export of money to pay for either imports of natural gas, or for the cleanup of Marcellus and Utica shale regions laid to waste via fracking.

Another nice thing that the new offshore Long Island groups are doing is to focus on the job creation potential of offshore wind turbines (and maybe, eventually, they will get around to Long Island Sound's tidal energy potential). This is the most immediate benefit of such projects; the benefits of the locally produced delivered electricity take a while to be seen/pay back. And since we are at least 1 million jobs shy of what we should have in NY State alone, the Long Island projects do seem like a great idea. But why be so limited? Think big, and not just at that one spot. Odds are, the new batch of offshore wind supporters are still thinking small - a few billion dollars worth - in effect, almost a "one-timer". That is just so myopic, and so wrong. With an attitude like that, Global Climate Change easily will put Long Island into "fish farm" status before decent amounts of electricity from offshore are being tapped for this part of our state. After all, when the Greenland ice-sheets slide into the sea in a process analogous to landslides, that will raise ocean levels by at least 20 feet.

It would be far less expensive to install these big turbines on land and design them for offshore mode, and let Global Warming do its thing. Unfortunately, that does not create the number of jobs that putting them offshore in the first place does. And maybe that sounds a bit too much like being an environmental surrender monkey. Of course, we won't really have that problem in the Great Lakes, which is another reason why installing turbines in lake Erie, Lake Ontario, in Long Island Sound and in the Atlantic alongside Long Island is the smart way to go. Lots of them.

Cheap Electricity and Job Creation
Once upon a time, when the electricity in Niagara Falls was more or less stranded via inadequate long distance transmission, cheap electricity and lots of it did lead to lots of manufacturing jobs. And as a result, this region prospered. But then a lot of the sort of/actual local companies got bought out, sometimes off-shored and Corporate America/Corporate World figured out how to extract maximum profits from these operations and that cheap electricity, or else they just dumped their relic factories and went elsewhere, or just cashed out. Then add in automation, and what used to be done by 30,000 people could be done with 3,000 or less. Plus, there is only 400 MW of electricity reserved for locally situated industries. If electricity is, in effect, a raw material, it becomes a major cost factor, and obviously cheaper electricity leads to either a lower cost product and/or a higher profit product when the product price is set by higher production cost manufacturers. For example, chlor-alkali, air separation, silicon/ferro-silicon manufacture, lots of ceramics and aluminum production all have electricity as one of the (or THE) major production cost factors.

But, when electricity consumption is only a tiny fraction of the production cost, and when the generated electricity is itself only a small fraction of the total delivered electricity price, the advantages of super-cheap electricity production vanish real fast. In many cases, the cost of the "overpaid" part of executive management often exceeds the cost of the generated electricity, so that department would seem to be a better spot to look for cost-cutting. In addition, for the next couple of decades, there will be more jobs obtainable from manufacturing renewable energy systems than in using electricity in jobs where the cost of electricity is a significant production cost. As for those believing that old-timey religion about cheap electricity providing mass quantities of high paying, local wealth creating jobs, they may never change their opinion, especially since religious beliefs can trump facts on just about any occasion. After all, in the last decade in NY, most jobs have been created where electricity is the MOST expensive, not least expensive. In fact, NYPA headquarters (in White Plains, NY, one of the more exclusive, expensive sub-urbs in the state) should be moved to Niagara Falls, where electricity as well as housing is cheaper (especially in the City of Niagara Falls), air conditioning loads are significantly lower, and where almost all the over $100,000/yr employees could be paid half of what they are now hauling in and still maintain the same standard of living). And what are they waiting for - for Hell to freeze over? So, the generated electricity price is a bit over-rated when it comes to attracting a lot of jobs. Besides, all those sever-farm jobs require a massive quantity of electricity per job, and yet there is no commitment to the manufacture of the servers in WNY, which is where some serious quantities of blue-collar employment could happen. But, that's a bit of a digression...

Which leads to the Big Quest conducted by Lilly Tomlin - "The Search for Signs of Intelligent Life in the Universe". When it comes to large scale energy issues in NY State by so-called "responsible parties" and our elected/appointed officials, we would have to advise Ms. Tomlin to steer way clear of "here". But, we could get lucky - maybe the Occupiers have paved the way, and the NY Lotto motto is actually in force - "Ya Never Know". And we do wish our "Offshore Long Islanders" the best; who knows, some of those scarce as hens teeth proverbial jobs might spill into WNY, too. But it would be nice if they realized there is more to the offshore story in NY State than that sandy outcrop in the Atlantic...

DB

WNY's New Wind Farms - the Last of Their Kind for Some Time

2011-12-18T15:05:00.014-05:00

Introduction
If you've driven by the relics of Bethlehem Steel recently, you will see that 6 more Clipper 2.5 MW wind turbines are now installed. This 15 MW addition to the existing 25 MW array will soon be generating electricity. The incentives used for this project and to justify the investment of roughly $30 million will be extinct at the end of 2012 if nothing is done to change the wishes of the ruling Republicans of the U.S. House of Representatives; for the owner of the wind farm, it was a now or never deal. So that will mean 14 of these pollution free electricity generators, ones that are rarely ever heard but often seen. If they perform like advertised and do not experience "economic curtailment" (where wind turbines are shut off by grid operators because the added outputs of these units depress the spot market price for electricity TOO MUCH), an average of about 5 MW of natural gas sourced electricity can be avoided, which is a GOOD thing.

In other nice news, Invenergy recently announced they would soon start construction of their Stony Creek wind farm in Wyoming County. This will be located bear Rte 20A between Varysburg and Warsaw in the town of Orangeville. From a location standpoint, this is situated next to a 230,000 volt line (rated at over 300 MW of capacity) on a hill/ridgetop in diary country. The project will consist of 59 x GE xle turbines, rated at either 1.5 or 1.6 MW (but with the 82.5 meter rotor diameter in either case), total capacity being 88.5 or 94.4 MW. Again, with a 30% net output, this should average about 28 MW on a delivered basis, which also means that an average of 28 MW of natural gas sourced electricity will be replaced by the output of this project, and this is also a GOOD thing....

Discussion
Both of these projects are examples of economic development done by big companies which are also good for the American economy. First Wind (see http://www.firstwind.com/projects) has 11 operating projects rated at 735 MW and two under construction rated at 141 MW - they have concentrated on the US Northeast and in Hawaii. In this case, they are using Clipper Liberty turbines (96 meter rotors, 2.5 MW capacity, 80 meter towers); Clipper is now owned by United Technologies (UT), a major industrial/aerospace/defense contractor. The Clipper units are made in Iowa, towers (often) in Tennessee and the blades used to be made in Brazil, but after some notoriously bad quality blades, perhaps these are domestically made nowadays...

Invenergy (see http://www.invenergyllc.com/default.htm and http://www.thewindpower.net/developer_en_124_invenergy.php) now has 23 operating projects in the U.S. totaling 2025 MW of capacity. Their favorite machine of choice is the GE 1.5 MW (they have invested over $4 billion installing 1350 of these), and because they buy in bulk, they are believed to get discounts. Invenergy also owns the 112.5 MW Sheldon wind farm, which is about 10 miles east of the Orangeville location (Rte 20A might have to get renamed as "Wind Turbine Way"). General Electric (GE) is also a major defense/aerospace/finance/technology/manufacturing company, sort of like UT, only bigger. The GE turbine nacelles are made in California, the gearboxes in Erie, Pa and the blades in Pennsacola, Fla; towers for the WNY GE turbines tend to be made by DMI in Fort Erie using steel made in Hamilton. However, there are about 8,000 parts in a turbine, and lots of USA/Canada located companies supply parts and make a living/get income/pay employees based on sales of products and services to GE and Clipper.

In fact, the First Wind and Invenergy combined portfolio is almost 2760 MW, which is an investment of close to $5.5 billion. And since the number of job-years per billion dollars invested in the wind biz is about 16,000 direct ones, this supplied about 88,000 job-years of employment at manufacturing/construction wages. If the "job multiplier factor" for the wind biz is similar to the auto industry (about 4.5), this combined investment facilitated close to 400,000 job-years of employment. And since most of this has been done in the last 6 years, one can safely say that these two companies have helped create about 15,000 direct jobs and 51,000 indirect ones. Providing they keep up this pace of wind farm installations, that's a decent bit of job creating, a lot of which is centered around the Great Lakes metal-working industries.

Of course, this comes at a cost because of the bizarre way that we fund the renewable energy business in this country. In order to allow wind farm owners to make a profit while selling electricity at the rate more or less set by natural gas and coal sourced electricity providers (around 4 c/kw-hr), subsidies to the owners of the renewable energy systems are needed. In fact, no one can install ANY kind of new electricity production facilities and make a profit at a sale price of 4 c/kw-hr or less - notably new coal and nuke facilities (especially new nukes, which need over 20 c/kw-hr and are more expensive than offshore wind farms, even with their subsidies!). Besides, on a kw-hr basis, the subsidies to wind are pretty small compared to those given to coal (air pollution allowances/cost avoidance worth about $200 billion/yr - @ $85/ton CO2 for CO2 pollution and $62/ton of coal burned for particulates and SO2/NOx/elemental poisons like mercury and radon - plus the $12 billion/yr in subsidies given to coal mine owners) and nukes (subsidized money, the Price-Anderson Act, and no need to find a way to properly dispose of the spent fuel rods, for starts, as well as the equivalent of the PTC). But, instead of more logical payment systems such as those used in either Quebec or Ontario, we in this country subsidize the price of electricity, keeping it lower than it should be or would be if no subsidies were employed and if all external costs (like air pollution) were internalized.

But, let's consider the 2760 MW of installed capacity and what we are paying to subsidize this wind sourced electricity, as well as a particular benefit that rarely seems to get mentioned. At a 30% average net output, these wind farms (including the 135 MW Montana Judith Gap wind that has an average output near 42%, and which is one of the most productive ones in North America) would make about 828 MW on average, or 7.26 million MW-hr/yr. BTW, this also is about the output of a large nuke in North America (such as NY's FitzPatrick nuke near Oswego, of 838 MW capacity and 6.92 million MW-hr/yr in 2010).

The prime subsidy is the one rarely mentioned at all, which is the MACRS plus the interest paid on loans combined deduction from taxable income. The MACRS portion is mostly used up in 3 years/totally in 6 years. Over the course of 6 years, the "paper losses" estimate would be $5.5 billion (MACRS) and about $1.5 billion for the interest on $3.3 billion in loans for 6 years, totaling about $7 billion in deductions, or about $2.8 billion in avoided combined federal (35% marginal tax rate) and state (average of 5% income tax rate) taxes on regular or passive income. Next comes the PTC or its various equivalents, the ITC or the Section 1603 grants, which can be approximated by the PTC tax credit that only applies to passive income. The PTC rate is now$21/MW-hr for 10 years, so 828 MW * 8766 hr/yr *$21/MW-hr = $152 million/yr. Over 10 years, this would add up to about $1.5 billion; so far, most of this has yet to be recovered. For the "tax investors" who benefit from this via the partnerships that are made between the developers and rich people/companies/"hedgies" with massive passive income and thus a potential big passive tax bill (as long as they haul in that flow of passive cash), it's a bit of a risk; if their "booty haul" rate slows down or ceases due to another Great Recession or worse, they get no tax credit. After all, if you have no income, you still can't take any tax credits. It must be special to be able to anticipate a full decade of massive taxable income and thus book those tax credits, otherwise known as avoided taxes, as income on another set of books. But, that's a digression, and besides, who made up these crazy rules, anyway? And besides, what is crazier, having to depend on this dubious slight of hand, or thinking that we could fund a few trillion dollars worth of renewable energy investment in the US in the next decade or two in this manner?

So, the total in avoided taxes for the owners or "psuedo-owners" of this project would be $2.8 billion (MACRS/interest) and $1.5 billion (PTC), or $4.3 billion over a 10 year period. Not bad for an investment of $5.5 billion to make an average of (estimated) 828 MW. On the other hand, consider this example - Invenergy has a long term (20 year) Power Purchase Agreement (PPA) with Northwestern Energy to sell the Judith Gap energy at $31.25/MW-hr, or 3.125 c/kw-hr (http://dnrc.mt.gov/Trust/Wind/JudithGap.asp), which is really really CHEAP. That cheap electricity comes at a price, as the 135 MW of turbines cost close to $270 million in today's dollars to install. Without the subsidies, the owners would need to charge near $70/MW-hr to $80/MW-hr, at least until the project gets paid off. And other projects with less robust wind resources would need even higher prices....

At the end of 2011, the US wind turbine capacity will be around 52 GW, and the net output will be around 15.6 GW (44 GW at the end of 2010 = 13.2 GW net output). Almost all of the wind derived electricity displaces natural gas sourced electricity (but in some cases this might be fuel oil, coal or even nukes). And while some of this might be the less efficient single cycle gas turbines, a lot of combined cycle ones with a thermal efficiency averaging 45% are being displaced. This can be used to estimate how much natural gas usage is avoided, and this works out to a rate of 878 billion cubic feet/yr (bcf) of natural gas. Last year, 7,377 bcf/yr was used to make electricity, and dramatic rise from 2009 (well, for a commodity), at 6.9%/yr. Overall gas usage increased by about 5.4%, and yet prices still remained very low for gas. However, the increase in demand that would have come from not using wind turbines and actually using more natural gas would have increased prices for methane significantly. That 878 bcf would have increased demand by an additional 3.6%, so that the total increase in gas demand would have been near 9%. To get an idea on how sensitive to supply/demand imbalances natural gas prices can be, sales in 2008 were about $230 billion, but in 2009, when 3% less gas was sold, sales were only $92 billion. Pretty touchy, eh? For 2011, gas usage will be displaced at a rate of over 1 trillion cubic feet per year (tcfy), or about 4% of all natural gas used and 13% of the methane used to make electricity. Like it or not, wind turbines are now an important impediment to rising natural gas prices..... and the more wind turbines that get installed, the bigger the impediment to natural gas price increases as well as the use of fracking to extract natural gas from shale gas sources.

The increase in prices would mostly affect those who use gas for heat (about 2/3 of methane consumed each year is used just to make heat). Merely raising prices by $1/MBtu would pull $16 billion/yr out of residential, commercial and industrial customers, but this "demand shock" (where wind turbine electricity is replaced by gas sourced electricity) could have easily spiked the nation's methane bill by $50 to $100 billion/yr. All that becomes money which cannot be spent on other things, and such a price increase would act like a giant, ultra-regressive sales tax, where the proceeds don not go to pay for governmental services but instead get siphoned largely to the "upper 1%" of our income brackets. Just what we need these days..... NOT! The resulting depressed economic activity would affect our local, state and federal government in two ways - increased costs (heating schools and buildings, for example) and decreased tax revenues. Also just NOT what the doctor ordered, economically speaking, these days. Of course, gas price rises would also raise electricity prices, especially in states like NY where we have "competitive" electricity generation markets (quotes are highly deserved). Since coal and nuke generation costs remain unaffected by natural gas price increases, gas price rises translate into the equivalent of "rentier" profits to owners of coal and nuke sourced electricity generators in such states. Since most of such profits go to the upper echelons of the American income distribution and that does not seem to be very beneficial to our economy as a whole, it seems that actions encouraging these "rentier" profits associated with increasing usage of natural gas are unwise and them some.

Installations of real wealth producing investments are far too rare these days. But, if we are to fix both our economy and our climate, what is needed is installations like these two companies have undertaken, but on a massive scale, and not just exclusively by companies who need massive tax avoidance in order to lower their electricity generation prices to rates that are historically depressed levels. Investment by companies, cooperatives, individuals and governments big and small all have the same effect at job creation, and especially manufacturing job creation/retention. We need at least 400 GW of non-polluting electricity to replace pollution sourced electricity (gas, coal, nukes, some oil), which is roughly 400 times the combined First Energy/Invenergy investments to date, and it would be good if this was done in less than a decade. Then we need about 300 GW additional (delivered basis) just to replace all the natural gas used for heating (such as by replacement with heat pumps) as well as a lot of the gasoline now used in cars/diesel in trucks and trains - the diesel trucks mostly need to get replaced with electric freight rains. And it's rather obvious that if 0.828 GW delivered costs $4.3 billion in avoided taxes, this system is not going to deal with 400 GW or 700 GW delivered, even if this is on a 6 year average/10 year total basis... In case the math eludes you, that's a lot of tax avoidance by the super-rich - approximately $3.6 trillion in avoided taxes to replace all our polluting electricity sources and most of our pollution based heating. And guess who would have to make up for that budgetary discrepancy....

The Wrap-up
As for WNY, these two new wind farms can deliver lower spot market electricity prices via bumping off gas used to make electricity, which in turn will put further downward pressure on coal sourced electricity pricing. Last year we only used 46.1 MW of gas sourced electricity (see table 3, pg 6 of this report: http://www.4shared.com/document/IKgU61cv/Lee050411e.html), and adding in another 33 MW (5 + 28) means that we only have 13 MW to go until we are freed from the scourge of using that fossil fuel to make electricity. Of course, then we have to move on to the next fossil fuel scourge of our electricity system, but one scourge at a time might be the way to go at it.

Also of note, the permit and documentation for the Orangeville project can be found here: http://www.invenergyllc.com/stonycreek/index.html. One interesting conflict between the developer and those opposing it (and by default, those almost invariably in favor of more pollution) concerns the sound levels made by these turbines. The Invenergy report can be found here: http://www.invenergyllc.com/stonycreek/pdf/1/03_DEIS/DEIS_Appendices/D_Noise_Study_2010_02_11.pdf while the opposing view can be found at the end of the public comments (warning 17 MB download!): http://www.invenergyllc.com/stonycreek/pdf/2/E.2.h%20-%20Written%20Public%20Comments%20306-342.pdf. It is like night and day difference, with opponents claiming that houses located next to busy roads like Rte 20 experience amazingly quite lives. Road noise and "wind noise" - wind blowing through trees - add up to more than the wind turbines are likely to produce. The 50 dBA level is pretty low, and to be able to argue that background sound levels next to a busy road are below average hearing levels for most people (40 to 45 dBA) is a bit of a stretch. But, sound is a great arguing point because after all the measurements come in, the question of "what do they mean?" becomes the main refrain.

Finally, here is the latest of First Wind's wind farms to get commissioned - a 40 MW, 16 Clipper array in Vermont - http://www.firstwind.com/projects/sheffield-wind. And on a ridge line no less, where it will actually be seen! Oh well, I guess that beats using an old geezer nuke (Vermont Yankee) with its nasty habit of leaking radioactive Tritium into the neighborhood. BTW, Vermont Yankee is one of those 500 MW GE made units that is identical to Fukushima Unit #1.

DB

Indian Point and Fracking for Methane in NY State

2011-12-15T13:57:00.016-05:00

From http://nuclearromance.wordpress.com/2011/08/31/quake-raises-red-flags-for-indian-point-nukes/

Introduction
As you may have heard, there is a big fracking controversy in NY State, and especially in the rural regions that stand in the cross hairs of it. However, it turns out, at core, this is another example of squeezing the hydrocarbon dregs out of North America. Since NY has essentially no oil and natural gas resources still left to tap, the Marcellus and Utica tight shale gas resource are it as far as commercializable hydrocarbon mining goes in NY.

Natural gas (Ngas) is used in NY to make electricity (about 1/3 of Ngas consumed in the state), heat houses (about 1/3) and the remainder is used for commercial and industrial heating. All of that electricity made by Ngas in NY (about 6 GW) could be replaced with non-polluting sourced electricity, and the lowest cost way to do this would be using wind turbines along with a few additional pumped hydroelectric energy storage units (NY has two of those, one in Niagara Falls and one in southeast NY State at Blenheim-Gilboa State Park). In the process of evolving from this depletable, air polluting (the CO2 combustion by-product, "fugitive" methane emissions) fossil fuel electrical energy source, a lot of jobs could be created and maintained in NY, though it might raise the price of electricity a bit (but not out of the realms of affordability, however). To make an average of 6 GW of electricity, about 18 GW of wind turbine capacity would be needed, and at about $2.5 billion per GW of capacity these days, that's a long term investment of about $45 billion investment, and 720,000 job-years of direct employment. If you or your friends, neighbors and relatives need a job, well, that's one way to do it. Add in the jobs created by creating those wealth producing manufacturing jobs, and UB 2020 just looks like amateur hour, assuming there is even any net job creation even before all the various governmental subsidies and "prop-ups" are considered/factored into the equation.

In fact, from a marketing perspective, the only way to increase the Ngas price significantly these days is to increase the consumption of it slightly (Ngas is a price inelastic commodity). Correspondingly, the best way to keep the price low is to steadily decrease the consumption of Ngas.

But now, along comes the Indian Point nuke complex (2 operating out of the 3 nukes that have been installed there). Indian Point 2 is up for operating license renewal in 2013, and IP 3 is up for relisencing in 2015. If they do not get re-licensed (and the renewal is strongly opposed by both Governor Cuomo and Attorney General Schniederman and much of the public), some means of coming up with close to 2 GW of electricity for NY City and its northern burbs will be needed. Enter Ngas, and in particular, NY State sourced fracking derived Ngas, lots of politics, lots of intrigue, the Entergy Corporation (who owns these two major nuke cash cows) and the recent and still not crammed down the memory hole Fukushima FUBAR. Mix well, and then prepare for a a major rumble!

After all, that's a nice big new market for Ngas. Or, that's a lot of jobs making wind turbines, pumped hydro "batteries" and improvements to our existing high capacity transmission lines. And just because the latter option is more job creating (especially working class jobs), more environmentally logical/desirable, well, this is NY, and those options don't carry much weight. Right?

Discussion
In the summer of 2008, natural gas (Ngas) prices were going for over $13/MBtu on the spot market (Henry Hub - see chart at http://www.neo.ne.gov/statshtml/124.htm), but these soon crashed, partly as a result of the Great Recession reducing demand by a few percent and partly due to foolish bets made by the likes of Aubrey McClendon (CEO of Chesapeake Energy, a natural gas exploration and production (E & P) company and prime fracking advocate/pusher), who lost $2.3 billion when Morgan Stanley called in a bet he was stupid enough to make regarding gas futures contracts with them (by and large, the operator of a casino, on average, always comes up ahead, and in this case, that would be Morgan Stanley). For 2008, Ngas averaged close to $10/MBtu, so national Ngas bulk sales were close to $230 billion. By 2010, bulk prices were still in the pits (and still are), averaging below $4/MBtu, so sales were close to $92 billion/yr. In general, the cost to get Ngas out of the ground where fracking tight shales was the means to do this was greater than the price that could be obtained for this Ngas. Oops. Most frackers subsisted and continue to exist on the higher prices they had locked in via the futures market, but that jackpot only lasts for so long (most gas futures contracts are only a few years long). Or they went the "asset sales route", hoping to get bought out by cash-bloated major oil companies whose stock price is unrelated to their cash stockpile but is related to proven hydrocarbon reserves, and who are having a hard time coming up with new hydrocarbon reserves.

So how to boost Ngas consumption enough to re-establish the thermal equality with oil prices that had been the norm until the late 2000's (Ngas would need to be $18/MBtu to match crude oil at $100/bbl and 5.6 MBtu/bbl of crude oil)? Running cars and trucks on compressed natural gas (CNG) is going at a snails pace, much to the dismay of characters like T.B. Pickens (also called T. Boone, but T.B. may be a better analogy of his societal usefulness). Converting methane to gasoline and diesel (GTL plants, see http://wagengineering.blogspot.com/2010/11/marcellus-gas-pipe-dreams-or-wind.html) can be done, but at close to $18 to $25 billion per world scale facility, well, that's not in the cards when there seems to be a de-facto capital strike by corporate types against president Obama. And those darned wind turbines now make about 3% of the electricity in the US (44 GW capacity, 13 GW delivered), and displace over 4% of all the Ngas consumed in the US - that's the OPPOSITE of increasing Ngas consumption! As for shutting down coal burners and replacing them with Ngas, well, coal makes for cheaper electricity, especially from old plants. Also an "oops", even at presently depressed Ngas prices.

Besides, nobody trusts Ngas prices - since 2000 there have been 4 significant price spikes, starting with the Enron crimewave in California. About the only thing trustworthy about Ngas prices is that there is no stable long term price that can be accurately used. After all, both political and weather disasters can affect Ngas production, and slight mis-matches between supply and demand have drastic effects on Ngas prices. And then there is all that wonderful speculation activity, and the betting on bets on Ngas prices that can be done and which can dwarf the money spent on buying actually delivered product. A lot of such activity does not mesh well with those who make electricity, where most production plants last over 20 years, and in the case of the Huntley coal burner in Tonawanda, over 75 years (with occasional improvements).

And so, the question of how to replace the 2 GW of Indian Point electricity - with Ngas, with wind turbines and tidal energy systems - or whether to replace it (by extending the original 40 year operating licenses by another 20 years) is one fraught with economic, political, financial speculation, job creation or no job creation as well as societal safety and environmental ramifications. For example, if you want to minimize job creation potentials for middle class people, then keeping those plants going or else replacing them with Ngas sourced electricity would be the best way to achieve that wish-fulfillment. On the other hand, if you want to maximize job creation without pushing electricity prices so high as to cause a lot of economic misery, wind and tidal would be the way to go (requiring around $15 to $20 billion of investment/job creation). Or, you could maximize job creation by producing 2 GW delivered via solar PV (requires at least 20 GW PV capacity plus about 4 GW new pumped hydro capacity and huge storage capability and an investment/job creation expenditure north of $100 billion). Of course, that solar PV would be in the 40 to 50 c/kw-hr range, which is over 10 times the present generation price for electricity in that part of the state...).

This topic of using the replacement of the "IP Twins" is explored in further detail in a paper that was written for the benefit of the local Sierra Club (who are not fans of either new Ngas fracking in NY State or of continued operation of the IP Twins). They like renewable energy approaches to job creation and environmentally sensible electricity production (the Apollo Alliance/Blue-Green Alliance are joint efforts by the United Steelworkers and the Sierra Club). Anyway, this paper is not their official policy - just written to them as a way of sounding out some ideas.

There is just no way that the IP Twins are "safe". So far we have been lucky, but, as Clint Eastwood famously said, "Feeling lucky, punk?" They are an accident waiting to happen, and if it does happen, effectively the finances of NY State are toast. An "oops" event at one or both would render most of the wealth of NY as useless when mass radioisotopic poisoning of the majority of the population of NY and more importantly, the vast majority of the wealthy (and millions of not so wealthy) real estate in the state occurs. And there is just no accurate way to ascertain the risks (= probability of an event times the severity of that and subsequent spin-off events) of a nuke incident - you can't use Gausian ("bell-curve") statistics for "black swan" events. And then there are the humongous subsidies associated with no final disposal method of spent fuel rods ("swimming pools" don't cut it) and the Price-Anderson Act, which makes nukes possible in this counrty. The P-A Act essentially puts the Federal Government on the hook for disasters above the $10 billion mark, and an "oops" at Indian Point would likely push past $1 trillion with little effort.

Of course, there are four more nukes in NY State that also need to be shut down ASAP - all located in the SE part of the Lake Ontario coast, (Rochester-Syracuse- Oswego). And then don't forget the 12 on the Ontario side of Lake Ontario (10 active and two dormant). After all, prevailing winds tend to go from west to east, especially in the winter, when lots of Syracuse to NYC and Syracuse to Boston winds set up. It's just that there are well over 15 million people within 50 miles of the IP twins, and the money obtained from taxes down there tends to support us in WNY, so that's sort of like threatening the goose that lays those golden eggs with a sawed-off shotgun and/or an RPG. Not wise at all..

Anyway, a copy of the paper (with references and lost of numbers) can be found here:
http://www.4shared.com/document/d-fbvXsg/bwag080911b.html. Got any opinion on this matter? Maybe all we have to lose in WNY is a lot of unemployment, and we could gain employment if those nasty twins are replaced in a cost effective manner with a job-creating approach.

BTW, for those who scoff at whether this is possible, check out this article:
http://www.renewableenergyfocus.com/view/16406/comment-north-german-state-doubles-onshore-wind-energy/. While there may not be much of a way to change some peoples minds, perhaps others may not be immune to facts and logic... Of course, what might have to change is the pricing system for renewable energy in NY State - see this article as to why that might be/as to what actually works: http://energyselfreliantstates.org/content/what-renewable-energy-policy-works-best-feed-tariffs.

DB

Germany, Jobs and PV Electricity - Some Lessons for the USA

2011-12-13T14:16:00.007-05:00

From http://www.solarworld.de/en/solar-power/projects-and-campaigns/for-farmers/
The money quote:

"Every single ray of sunshine provides a secure income, thanks to a SolarWorld solar power system and state incentives guaranteed under the German Renewable Energy Law. Moreover, income is assured for 20 years, irrespective of economic trends. Earnings from roof systems are comparable with those from conventional financial investment opportunities, but are more solid. Solar technology also makes an important contribution to preserving the natural environment."

Introduction
Germany recently had its one millionth PV system hooked up to the grid, and the vast majority of these have been installed in the last decade. This was made possible via their Feed-In Tariff (FIT) system, which is designed to stimulate manufacturing jobs/industries by removing a lot of the valueless added financial risk associated with fluctuating grid spot market prices (and whose exact value at any given time in the future is unknowable). Due to the way that the FIT system works, almost all PV systems in that country are hooked up to the grid. In effect, the grid and associated pumped hydroelectric energy storage units (Alps, Norway, Sweden, France, southern Germany) become the battery, buffering variable supply and variable load. Recently, PV output contributed over 12 GW to the German grid, or roughly 15% of the power needed for the country, for a short while.

Most Americans are quite ignorant of why FITs work so remarkably well, and most German's who are knowledgeable about energy pricing look at what passes for our pricing systems with a mix of horror (how could a country with so many armed and dangerous nuclear weapons be SO stupid?) and wonder (at how we hobble ourselves and our awesome renewable energy potential, but to our disadvantage/their benefit), since the dysfunctional US system certainly allows their companies and exports to be in an advantageous position. Germany has both a pretty pathetic solar PV AND wind energy resource, especially compared to the USA. We have over 30 times our present electricity consumption in commercially viable wind locations, and we also have a lot of really sunny regions. And all we in the USA really need is a bit over twice current consumption to replace all pollution sourced electricity, allow for the extra needed electrical energy storage (pumped hydro) to go all renewable and replace most of our natural gas consumption (that used for residential and commercial heat and hydrogen manufacture). Unlike Germany, we have deserts, where at least 325 all sunny days per year is a reasonable expectation; Germany has more cluody/rainy/snowy days than we have in Buffalo - and ours is a 52% "sun obstructed" climate...

Discussion
A good overview of Germany's PV efforts can be seen here: http://en.wikipedia.org/wiki/Solar_power_in_Germany. According to this article (http://thebreakthrough.org/blog/2011/03/doing_the_math_comparing_germa.shtml), over $US 86 billion had been spent/invested as of the end of 2010 to install 17.3 GW of PV capacity. Since the average output is 9.5% of the peak rating (-> 1.64 GW average output), this works out to an average cost of $US 52 billion per delivered GW, or about 60 cents/kw-hr, and that's just to generate it; there are hefty transmission costs, fees and VAT taxes on electricity sold, too, so that the full delivered cost is not cheap.... However, because of the way the FIT system operates, this small fraction of Germany's overall electricity is "blended in" to other generated sources, so the average German residential customer is only out a few Euro's a month. These days, the fully installed cost has been reduced by about 30% or so, but PV will never be cheap until the capital investment has been paid off.

In 2011, a bit more than 5 GW of PV will get installed, pushing the total up to near 23 GW, and pushing the total investment to over $US 100 billion. Almost all of these systems have been made in Germany, employing vast numbers in the chemical industry (making the semiconductors, dopants, encapsulants, cell wiring, etc), specialty glass, chemical/factory equipment needed to make PV and PV component factories, electronics (the dc output needs to get converted into ac via inverters), and then there is the fastener, framing, structural support and electrical equipment biz. Close to 200,000 people directly employed in a country of 85 million... and also a sizable export business, too. FITs are ideal for stimulating high skilled capital intensive manufacturing and all of the support systems/supply chains. In Germany, the FIT system was seen as a way to replace the employment that would be lost from the automobile sector in the late 1990's; nowadays, more steel is consumed by wind turbine manufacture than by the car industry. And that is really cool...

Most American's can't really get over the fact that the PV sourced electricity made (now about 2.5% of Germany's average electrical consumption) is so expensive. And this is completely unsubsidized - there are no tax deductions or tax credits (which almost invariably work out best for those who have a lot of money and are supposed to pay the highest tax rates) to help lower the needed price to make the investment worthwhile and at the same time be able to sell PV electricity at something like 5 c/kw-hr. The full cost of PV is paid by German consumers of electricity - the ratepayers. And since cheap prices only promote gluttony while more expensive prices promote a more efficient use of electricity - well, that's good, too, right?

The secret of why this works is the FIT system (here is how these work in a bit more detail: http://www.allianceforrenewableenergy.org/join-are.html), which has two major facets and a nifty wrinkle that is based on the way that a technology tends to develop over time. In the FIT system, all contracted Green energy (wind turbines, geothermal, biomass, biogas - which makes about 800 MW of electricity in Germany - small hydro, tidal, run of river and PV) must be sold at contracted prices when it is made and no "economic curtailment" is allowed (more on that in a bit). Then comes the FIT contract (generally a fixed price for 20 years), which is tailored to the actual cost of production for a given technology and scale of that technology. For example, onshore wind, which is less expensive that offshore wind, gets a lower price than offshore wind. The price is based on the average cost of production for that technology/scale and a socially determined reasonable return (profit). So, if you place wind turbines in a place with a really poor wind resource, you would go broke, but if you place them is a decent spot, you could make money. Unlike US mega-banking (or more properly, bankstering), failure is not rewarded. This stable price insures predictable cashflow as long as the project is decently installed and maintained. Then there is the "digression rate" (nifty wrinkle), where every year, the FIT contract prices for that technology/scale are dropped from the last year's value to match the increase in performance/drop in the manufacturing/installation costs, until those no longer drop. This forces competition between manufacturers, developers and bankers (who finance these to an amazing extent). The combination of stable pricing and digression is the main reason why Germany and countries who use the FIT system are the world leaders in wind, biogas, biomass and PV technologies, and in the employment of people making and installing them.

In Germany, renewables are a very safe investment (see "the money quote"), and actual competent banking is a big reason for this. In general, individuals, small companies, partnerships and cooperatives get 95% of the project cost as a bank loan, and for bankers, this is pretty easy money. Since they know the price for the product, and a reasonable estimate of the annual energy production is also a given (required for loan), it is really easy to determine if the owner will be able to pay back the loan. Contrast that with the U.S. for wind projects, where at least 60% of the project is equity and less than 40% is debt. In a place like NY, the full price that will be obtained for the electricity is unknowable, as is the likelihood that the investor(s) will be able to use the tax credits/deduction incentives, or whether enough of the project output will get shaved off by economic curtailment to send the financials into the red zone. All that uncertainty ups the financial risk of the project, which means loans that come in at higher interest rates and shorter terms than in FIT countries. It makes the USA less competitive, so much so that our superior wind and solar resources are rendered meaningless.

One advantage of the FITs is that they actually force the prices of pollution based electricity DOWN, and in some instances, polluters actually have to pay up to 5 c/kw-hr for someone to take their generated electricity (this price lowering tendency is called the Merit Order Effect, alias MOE). The increase in renewable electricity production at relatively constant consumption rates results in less consumption of coal and natural gas (mostly imported into Germany), and with less demand comes lower prices. Which is good, right? And the "no curtailment" aspect prevents utilities from cutting off renewable generators whenever a large surge (sunny and/or windy day) of green electricity depresses the spot market price (even into negative territory) and ruins the profits of the owners of coal burners and nukes. Oh well...

So, FITs are designed to stimulate employment in value added manufacturing, which is where advanced industrial societies (like the US and Germany) create most of their real wealth (mining and agriculture also result in real wealth production). And, for good measure, some electricity gets made with no pollution, no possibility of a nuclear "oops event", and no fuel consumption. Also, when that electricity gets made there is the added benefit that is puts some downward pressure on fossil fuel prices that are going up as a result of depletion as well as increased demand for energy worldwide. Net new employment in the renewable energy business in Germany is roughly 350,000 in the last decade, equivalent to about 1.4 million in the U.S. Not bad... After all, would you trade real unemployment north of 16% (U6 value) for employment, but at slightly higher electricity prices, or maybe even the same prices once the MOE is factored in?

But a funny thing happened, along with all these other societally beneficial things, and this is especially noticeable in the PV biz in Germany. In 2010 there were 250,000 new PV installations, 7.4 GW of capacity and an the average size was 29 kw (though most of the installed systems would be smaller than the average, since there were some larger installations). Most of these are small scale investments, probably averaging about $US 100,000 each. But, for 5% down (or $US 5000), individuals, families, partnerships and groups of friends can also become owners of income generating energy production systems. That 29 kw average unit would make about 24 MW-hrs/yr of electricity, and at $US 450/MW-hr (45 c/kw-hr), that's about $10,800/yr, or roughly about $500/yr in profit based on that $5,000 investment. Try getting that from a bank. Of course, most of the revenue from the sales of electricity go to pay back the loan, but, it sure beats 0.5% from a bank account in a bank that probably did something really stupid like invest in Spanish government bonds or Irish real estate values. Plus, people tend to like investing in something that makes the world a better place, gets them a bit of money, does not lose money and helps put their fellow citizens to work who would otherwise be unemployed. And while similar things are done with wind turbines, in 2010 an average new turbine installed was 3 MW in size and it probably cost $US 8 million. And 5% of $US 8 million is still $US 400,000, so that's a pretty hefty threshold to market entry, and not available to everybody. But 5 grand? Sign me up... Oh wait, this is the US, where such opportunities do not exist. Instead, real estate or an often kleptocartic stock market (see http://www.zerohedge.com/news/goldman-punkd-clients-yet-again) awaits its next small investor suckers... excuse me, potential investors alarmed a the net loss of money that happens when you leave your money in the bank.

Besides, what else are they doing with their roof, the south side of a barn, that parking lot for their business, or maybe the back yard that otherwise needs more mowing? And when the bank loan gets paid off, they will have a nice income supplement of, for this project, about $US 5000/yr.

It is now the strong desire of middle and working class Germans to actually have something to invest in that is driving the German PV biz. They don't trust their stock market much these days, either. And the ones who bought into European Sovereign Bonds...they can't be pleased with that choice at all. Otherwise, they have dead end options like more bars and restaurants, or real estate (you can never lose there, right?). And they are more than willing to pay more for their electricity in order to employ their neighbors, as well as provide a decent low risk way to invest some of their savings in something that actually makes Germany a better place. Naturally, all that export income from the sale of PV's and PV factory components also is nice, too.

Of course, the government and most German's realize that most of their electricity will be made by non-PV routes, even when coal usage fades to nothing, the Russian gas fields get drained or that gas gets too pricey, and tall of their remaining nukes get shut down. Odds are, onshore and offshore wind will supply most of Germany's electricity. Besides, maybe soon some Made in Germany PV systems will get installed in North African deserts, and then the HVDC power systems (also made in Germany) will transmit it across the Mediterranean via underwater lines (also made in Germany) into Europe. Geez, more jobs....

DB

2011 Durban Climate Talks - A Failure to Communicate

2011-12-08T09:47:00.007-05:00

From http://www.nordex-online.com/fileadmin/MEDIA/Fotos/nordex_hybrid-tower_140meters.jpg, a 2.5 MW turbine on a 140 meter tall "hybrid" tower (80 meters concrete, 60 meters steel), located in a very industrial part of some city (possibly Hamburg, Germany). The taller hub height taps stronger winds than it would using an 80 meter tall (usually all steel) tower, resulting in at least 20% greater energy output for that site than would be the case with the 80 m tower. Cool, and then some....

Introduction
Durban, South Africa is hosting the 17th UN Sponsored Climate Conference, an event that is largely invisible to the American public thanks to essentially non-existent mass media coverage (scandals and the circus-like Republican primary campaign soap opera seem to be more entertaining). And it looks like there will be no upgrade of the problematic Kyoto Agreement, which, like tax-based subsidies for wind power in the U.S., is better than nothing, but sure leaves a lot to be desired. And, as a businessman just said in a Democracy Now interview, in business you rarely get 17 times to do a deal, and thus, maybe this is not a productive way to achieve a useful result.

Odds are, he has a point, though his preferred solution might not work, either, especially if it involves the sale of "carbon credits", whose price in Europe has collapsed from $US 33/ton of CO2 pollutant to less than $US 3/ton of CO2. The sale of those "credits" was supposed to fund all kinds of wonderful stuff, but this was based on people paying extra to consume electricity, oil and natural gas. And given the impending collapse of the Euro and the austerity induced recessions affecting almost all of Europe and much of the US economy, that is not a happening concept.

Many third and fourth world countries (often presently characterized by low per capita CO2 pollution and low per capita fossil fuel consumption) are complaining, with lots of justification, that the U.S. is not going to reduce it's CO2 pollution rate (as in ~ 6 gigatons CO2 pollution per year for 300 million people) significantly in the nest 8 years. This is because we will keep on burning coal to make cheap electricity, burning natural gas for heat and electricity and burning oil for cars, trucks and jet airplane transport at essentially a constant level (on the plus side, at least we are not increasing our CO2 pollution rate, as is the case with China and India). In effect we are using up their share of the "CO2 dump" that is our atmosphere, and have been for a long time. And they think that the present administration should, could and/or would try to order U.S. citizens and companies to drop our fuel usage/CO2 pollution significantly by 2020, or that U.S. residents/companies would willingly do so by paying more in the form of de-facto CO2 pollution fees (those "carbon credits" or something equivalent, like increased sales taxes on gasoline). Well, any administration that attempts such a thing now or in the next few years would be voted out of office in record time, and US citizens, the majority of whom are actually experiencing a declining standard of living, are not going to pay more to use less energy, at least willingly. As for paying MORE taxes to fund fund a $100 billion global climate change adaptation/"third world greening" when local, state and federal services are already getting whacked for lack of governmental tax revenues, that is also not likely. And while increasing taxes on those who have pigged out at the proverbial trough in this country (the top 10% of earners, and especially the top 1%/top 0.1% top 0.01%) is a very popular concept (about 75% or greater popular approval), getting that accomplished to even a minor extent for domestic purposes is proving a difficult task. To fund overseas economic development, even if it is "green", is also not a likely sell to most Americans at the present time..

So we have a massive failure to communicate. In many ways, the vast majority of the world is expecting Americans to willingly cut their CO2 pollution rate by roughly 66% in 8 years, and if this means a significantly lower standard of living for most Americans, (energy usage and economic standard of living are pretty well connected/correlated - see http://www.theoildrum.com/node/8670), so be it. And since the vast majority of Americans are already experiencing a declining real standard of living, notably a result of higher oil prices, and are not happy about that (seriously, who would be?), calls to magnify that trend by a factor of close to 10 are going to be way past unpopular. Since our government is at least nominally a democracy (in reality, more a mix of democracy, kelptocracy, purchased media access, oligarchy and "oiligarchy", as well as others), the consent of the governed would be needed to accomplish this drastic lowering to our standard of living for MOST people. And that is just so not happening...

A Possible Solution...
Of course, there are ways that the US could keep consuming roughly our present level of energy, but without the CO2 pollution. And we actually need NO input from the rest of the world to do this - we can make all the wind turbines, solar hot water heaters, PV panels, pumped hydro storage units, electric cars, electric trains, electric heat pumps and upgrades of where we live and work to a decent level of energy efficiency we need. We could probably even do it in 8 years. But instead, our country nudges into the 21st century at a snail's pace with regards to energy efficiency and renewable energy installations, and this is best exemplified by commercial scale wind turbines. We have a wind resource capable of supplying 30 times our present electricity consumption (around 420 GW), yet this year only ~ 9 GW will be installed, equal to 3 GW on an average delivered basis. We would need over 120 to 140 years to replace our present pollution based electricity generation at this rate. And as of 2013, essentially all wind turbine installations will stop unless the Republican efforts to kill off the wind industry are circumvented...

The basic problem is that, in much of the world and especially the U.S., if it is not profitable, and especially if it is a money loser, renewable energy installations will not take place at climatically speaking meaningful rates. With coal derived electricity production cost (NOT including external costs like particulate and CO2 pollution) in the 2 to 4 c/kw-hr range, and the real, unsubsidized cost of wind derived electricity in the 7 to 15 c/kw-hr (depends on the site wind resource), something needs to be done. Either wind based electricity is allowed to be sold on a cost plus reasonable profit basis (PPA's, Feed-In Laws), wind is subsidized (in the US, via avoided taxes and tax-payer funded grants/price subsidies) and/or pollution based electricity prices are raised SIGNIFICANTLY (raising all electricity prices), but something has to be done. The existing electricity markets are deformed, terminally short-term focused and unable to correctly price the real external costs of pollution and the risk of nuke "oops" events.

So, if one desired to correct this problem, perhaps making renewable energy profitable (even only modestly so is all that is needed) is all that is required. But, until is is profitable to sell renewable electricity at significantly increasing quantities, orders for this equipment will not happen at rates that are climatically meaningful (i.e. those that will prevent the 2 C increase in average air temperatures due to excessive human caused CO2 pollution). And with no orders come no jobs to make and install these systems, and with no jobs/employment base comes no business and labor constituency which can advocate for the "wind biz" and other renewables. And the supply pipeline - everything from steel manufacture to transformers, epoxy resin, glass fiber and generator production - will also not be an advocate for renewable electricity. Money and jobs talk, and all else will wither... that's one of the American Ways...

Of course, a WW2 style effort at wind turbine installation could employ millions, and those millions might employ close to ten million other people. That would be good, right...? Electricity production in the U.S., via coal and natural gas combustion, is responsible for roughly 40% of the CO2 air pollution presently emanated (see this article for the list of CO2 pollution by countries for 2009: http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions), so that's 2.4 Gigaton/yr reduction in CO2 pollution... Another "low hanging fruit" opportunity is residential and commercial heating, which consumes roughly 60% of US natural gas usage (and is responsible for another 0.8 GT/yr of CO2 pollution) - combinations of better insulation, passive solar retrofits, solar hot water heaters and electric heat pump systems could rapidly eliminate a lot of this, and the reduction in natural gas usage would also have another great benefit - it would drop and/or keep low natural gas prices for users who don't or can't readily switch. Anyway, that's over a 50% Co2 pollution reduction from present rates, and a rather massive job creation and real wealth generation effort, all in one.

The last half of US CO2 pollution is largely oil based, and this will be much more difficult to achieve, as it is oil based. At present, our society is using the "demand destruction caused by higher prices" method of minimizing oil usage. Most oil products are used for transportation, and our society has adapted to incredibly gluttonous oil consumption levels - notably cars/sub-urbs, long distance trucks instead of trains, much train usage just for coal transport, and medium to long distance travel by jet planes. Due to an effect called the "Export Land Model" - see http://en.wikipedia.org/wiki/Export_Land_Model - prices are now rising at an average rate of 14.6%/yr. This results in an exponential price rise of roughly doubling every 5 years - so the crude oil price of $100/bbl in 2011 is apt to be near $200/bbl in 2016, and the prices for kerosene (jet fuel), gasoline and diesel are apt to double in 5 years. This price rise is graphically shown in the following graph (data for graphs from U.S. Energy Information Agency).

The smart people will adapt to use less oil products to get what they need to do via transportation, or perhaps no oil to speak of via higher mileage cars, electric mass transit and electric or plug-in hybrid cars. Those less smart, or those unable to change, or unwilling to change to more fuel efficient cars/more electrified cars/no cars, less vehicle miles traveled per day, and less need for long distance trucking/more rail will get, economically speaking, spanked severely. Odds are, this will not be equitably distributed negative behavior modification via higher oil pricing, but that seems to be our country's present policy.

Conclusion
The electricity and residential/commercial heating segments of the US energy consumption portfolio are probably the easiest to switch over from pollution based to non-pollution based, and we could drop our national CO2 pollution rate by roughly half and drastically stimulate employment/our economy in doing so. All that is needed is a way or ways to make this renewable electricity modestly profitable and in some cases, just not a money loser. The oil half of our CO2 pollution portfolio will be a tougher nut to crack, especially since so much of our country is built around gasoline/diesel/kerosene consuming transportation. But, demand destruction does work, and will be increasingly effective AND increasing cruel to those who have the least. While there are many governmental actions that can help wean us off the oil addiction, it seems that not enough pain in the form of higher prices has been applied to most Americans, though we may be close to that point. Till then, lots of ouch to go around....

But for the third world and the fourth world countries (where things are really bad, like Somalia) representatives at the Durban Conference, the path should be pretty clear. If they want the U.S. to drop it's CO2 pollution rate fast, just make renewable electrical energy production profitable within the U.S. Odds are, due to Peak Oil and especially Peak Global Net Oil Exports, the transport part will drive solutions like greater car mileage/less truck travel/more train transport in short order as prices rise at, what to many, is a dizzying rate. And they really should by-pass the gasoline epoch, since they will just get out-bid for the remaining bits by China and India, anyway.

For the U.S., we will need to prevent Chinese mercantilism from doing to our renewable energy sector what they did with shoes and clothes. And if it requires import duties or quotas based on the slave labor wages Chinese companies pay (many owned by the government or military), so be it. In this country, we need the jobs associated with mass producing wind turbines more than we actually need that wind-sourced electricity, at least for now. And a big wind industry in the U.S., employing at least 1 million people directly, is what the 3rd and 4th worlders in Durban need more than handouts from non-existent carbon credit monies, anyway. It's what gets the electricity segment off of fossil fuels and nukes, and "climate friendly". Who knows, maybe some of those countries might even like to buy some of our QUALITY made turbines for themselves, whether big, commercial scale, or village sized (where the U.S. is a world leader). And if they want grants, why not take this as Made in USA wind turbines, and not money that is far too often squandered via corrupt 3rd and 4th world government and business leaders....

Oh well, my 2 cents worth. What's yours?

DB

BTW, just announced, South Africa has selected Nordex (who has an American assembly facility in Arkansas) for two wind projects totaling 174 MW capacity. South Africa has a great wind resource, and plenty of ability to store electrical energy via pumped seawater (lots of cliffs near the ocean). It's time they quit being coal exporting/coal based hypocrites and also join the 21st century: http://www.nordex-online.com/en/news-press/news-detail.html?tx_ttnews[tt_news]=2223&tx_ttnews[backPid]=1&cHash=b3c628d9f3

Denmark's Newest Offshore Wind Array

2011-12-07T12:14:00.008-05:00

One of the monopile foundations for the Anholt wind farm made at the Bladt factory in Aalborg, Denmark. These often use 4" thick steel plates that have to get rolled into "cans", then welded, and then these are welded together after passing inspection/documenting the quality. The length of these range from 35 to 45 meters, and these weigh between 450 to 580 tons. 111 of these are needed for the Anholt array. From http://www.offshorewind.biz/2011/12/06/anholt-offshore-wind-farm-construction-to-begin-soon-denmark/

Here is how the "cans" are made, but with 4" (10 cm) thick steel plate, not so easy:

Introduction
The announcement of the beginning of the construction phase for the Anholt wind turbine array recently was made. This wind farm will be located about 25 km (15 miles) from the northeast tip of Denmark in the Baltic Sea. This wind farm will supply about 4% of Denmark's electricity (well, there are only 5.5 million people in the country), and it will supply between 250,000 to 400,000 households with all of their electricity, depending on how the average usage of a household is defined. And it will mean that about half a megaton/yr of CO2 pollutant does not get dumped into our planet's air, which would be the case in natural gas or coal was used to make that electricity.

Discussion
This is a pretty big project, estimated to cost around $US 1.8 billion, and is owned by Denmark's main electric utility (DONG, 50%) and a pair of Danish pension funds (20% + 30%). It will use 111 of Siemens SW3.6 x 120 wind turbines (3.6 MW capacity, 120 meter rotor diameter). These will be made in Denmark (Siemens bought out the Bonus wind turbine company a few years ago) - blade and nacelles in Brande, Dk, and the monopile foundations and turbine towers will be made by other companies in Denmark. The medium (34,000 volts) and high voltage underwater cable will be made in Germany (Nexans), and the substation/transformers (stepping up the 34 kv volt feeds from the turbines to 220 kv so it can be sent onshore) will probably be made by either Siemens or ABB somewhere in Europe. A brief summary can be seen here: http://www.dongenergy.com/SiteCollectionDocuments/wind/anholt/Anholt_offshore_wind_farm.pdf. But, with about 8,000 components to these turbines, lots of smaller companies will als get a piece of this action, and most of them local, too. And lots of money in marine construction is going to be spent (see page 4 for views of 4 of these vessels, and also http://www.4coffshore.com/windfarms/anholt-denmark-dk13.html).

In other words, jobs, jobs, jobs! High value added manufacturing jobs, environmental and geotechnical review, design, project management, logistics, legal and electrical engineering jobs, to name a few. And scheduling.... there will be lots of "moving parts" and quite the tight choreography required, with weather as the wild card. And since so many of these jobs are in Denmark and/or near Denmark, this will be a significant economic boost to the Danish economy. Another benefit is the avoidance of future fossil fuel imports. This 400 MW wind farm will have an average output of at least 160 MW, and this will avoid the need for between $85 to $100 million per year in coal imports, or significantly more if natural gas had to be imported from Russia for this electricity.

Of course, this does not come cheap. The $1.8 billion investment will be repaid by Danish electricity consumers, who will pay about 18.9 c/kw-hr for 20 TW-hrs (20 million MW-hrs) of electricity (about 14.3 years worth). That expensive electricity will get blended in with the electricity from mostly paid off wind turbines from onshore, as well as with the offshore ones that are still getting paid off. But, this is much cheaper than a new nuke, and more dependable, too. And there is a 100% certainty that no radiation "oops" event will happen, as has been the case at Fukushima, where a humongous does of Sr-90 contaminated water just spilled into the ocean, poisoning that region for the next century (it has a half-life of ~ 28.8 years, and is a nasty varmit, as Sr-90 gets concentrated in bones and then causes leukemia). With these wind turbines, no need for CO2 "sequestration" exists, either, which can cost in excess of 10 c/kw-hr for just that. The wind farm will also utilize the pumped and stored hydro facilities in nearby Sweden and Norway (more underwater electric cables between them and Denmark) to store excess electricity when the winds are blowing fast during times of low electricity demand.

The Baltic Sea has a lot in common with Lake Erie. Both are shallow water bodies surrounded by large industrialized populations. And both ice up in the winter (the Baltic is "brackish", with a salt content less than in the Atlantic Ocean). But, that is not a major problem. Of course, it never really was much of a problem in Lake Erie, either, and so easily engineered around, despite claims to the contrary by opponents of offshore wind turbines in Lake Erie......

This may be one of the last set of wind farms that use turbines as small as this 3.6 MW model. Siemens recently introduced a 6 MW x 154 meter rotor diameter unit with a gearless drive, but several years of actual field trials will be needed before it is deployed in large numbers. Here is a picture of this 3.6 MW unit installed near the shore near Copenhagen at the Avedore Holme project (see picture below, 3 of these installed in ~ 2 meters of water, 400 meters from shore http://www.4coffshore.com/windfarms/avedøre-holme-denmark-dk15.html). That project "only" cost about $US 33 million, but it also allowed Siemens to get real world data, and to examine the installation approach. Slight delays in the schedule can totally trash the economics of an offshore wind project, which is why project management is so important for these efforts.

From http://www.energy.siemens.com/hq/pool/hq/power-generation/wind-power/E50001-W310-A169-X-4A00_WS_SWT_3-6_120_US.pdf

As described earlier, there are lots of economic benefits that come from such a massive Keynesian-like stimulus at this time/state of the European economy. In this recent paper (http://www.peri.umass.edu/fileadmin/pdf/published_study/PERI_military_spending_2011.pdf - page 7) that describes the wisdom-deficient approach of using militarism as an economic growth program, data for the job creating potential of clean energy systems are provided. A bit over 16,000 job-years per billion dollars invested comes from wind turbines, and this does not even describe the benefits of not exporting money for importing fuels, and making electricity with no negative health effects. Other efforts have described wind turbine induced job creation and similar values were obtained. This project will create about 28,800 direct job-years, and lots of "spin-offs" and "multiplier effects" also arise.

And we sure could use some of that in Buffalo, right? Oops, not an option, thanks to the NYPA cancellation of the GLOW initial 500 MW set of projects. Instead, we get a future based on pollution sourced electricity - from nukes in Ohio and NY, and lots of coal burners. How 20th century can you get, right? One other hope for polluters was the faint prospect that more natural gas (from fracking) will be used to make the electricity that 500 MW of offshore wind could have made, but will not make. Not only would this backwards approach still create 733,000 tons/yr of CO2 pollution by burning 12 billion cubic feet/yr of methane, but that would also cause natural gas prices to rise as a result of increasing gas demand. And seriously, who needs that?

No wonder a lot of us formerly complacent types are not happy campers any more. We could do so much better on America's North Coast... Way to go, Occupiers, for changing the "public conversation" from dead end topics like financial Shock Therapy (also called Austerity, debt reduction during a major recession) to live wire topics like job creation as a cure for economic inequality and economic decline! Keep up the great work!

DB

Offshore Wind - Now a Big Deal in Europe in 2011 and Beyond

2011-12-01T12:00:00.009-05:00

The Sprogo wind farm in Denmark, deliberately placed next to a major bridge across "The Great Belt", where they can be seen, composed 7 x Vestas 3 MW x V90 turbines with gravity foundations. This stretch of water does freeze over in cold winters (http://www.helcom.dk/ice_breaking/icebreaking_main.htm). See http://www.4coffshore.com/windfarms/sprogo-denmark-dk12.html and http://www.sundogbaelt.dk/uk.

Introduction
Installing wind turbines in shallow waters near land has been done as an experimental project since 1991 (those 11 x 450 kw units in the Vindeby wind farm are still operating, btw). However, these days it is a really big deal, with over $US 25 billion worth UNDER CONSTRUCTION, and over 4000 MW (4GW) now operating, involving an investment of close to $US 12 billion, and producing an average of close to 1.3 GW on an average continual basis. In 2011, a bit more than 1 GW of capacity will be brought on line, worth about $US 5 billion. Over half a trillion dollars worth of permitted or in the process of getting approvals projects. The offshore wind installation business is now touted as one of the MAJOR job creating pushes for Europe for the next 20 years. Got the picture?

And to the bosses at NYPA, a few questions. Are you proud of yourselves, yet over you decision to make NY State irrelevant in the offshore wind industry? After all, your efforts at quashing offshore wind in NY State for once and for all (despite claims to the contrary about try # 3 near Long Island) could be a veritable fountain of gold for the natural gas business in NY State, and a major hurt to NY's natural gas and electricity consumers, too.... How does it feel to be such an aid and comfort to the natural gas industry and the associated financial speculators who live on betting on future methane prices, while the job creation potential of offshore wind in NY State (several times that of the frackers, and not even an environmental threat like fracking for gas and oil is) gets the "bug on a windshield" treatment... Happy now?

Discussion
Last week, there was a major offshore wind energy conference in Amsterdam - "Offshore 2011", sponsored by the European Wind Energy Association (EWEA) - see http://www.offshorewind2011.info/. The events have grown from 150 participants in 2002 to the 8200 or more attendees plus lots of exhibition space and exhibitors. And also, there was some intense marketing and sales efforts , with several tens of billions of dollars in direct sales, and more than that set up in the near future. And in conjunction with this event EWEA put out a great report detailing the current state of the business and future trends - see http://www.ewea.org/fileadmin/ewea_documents/documents/publications/reports/23420_Offshore_report_web.pdf (93 pages, but easy to understand).

One part of the executive summary really caught my eye - by 2030, an estimated 300,000 Europeans will be employed making and installing offshore wind turbines. And due to the high multiplier effect that goes with such jobs, this will directly and indirectly employ close to 1.5 million other people. By 2020, the (at least) 40 GW of installed capacity will be making over 16 GW of electricity on an average basis, or more than the output of 16 x 1.1 GW nukes. Or, put another way, that is a lot of avoided imported natural gas and coal, a lot of avoided CO2 pollution, and a lot of wealth creation. And a lot of avoided new nukes, too.... which IS a good thing.

In fact, the strong desire by the German population to dump nukes has made followers out of the presently politically and economically conservative German leaders. Ever since the various Fukushima reactor hydrogen gas explosions, nukes have been about as popular in much of Europe as syphilis and AIDS put together. So that leads to the next question - where to get the ~ 10 GW of electricity now made by Germany's still operating nukes within 10 years, and how to do so without burning any more natural gas or coal? Germany has a pretty crappy onshore wind resource, at least compared to the U.S., and even with almost 28 GW in onshore wind turbine capacity in a country of 85 million people, more electricity is needed. And while lots of progress has been made in the PV industry in Germany thanks to Feed-In Laws (same for wind and biogas), the solar resource in Germany is even crappier than is the average onshore wind resource. Well, their portion of the North Sea and to a lesser extent, the Baltic Sea, has excellent wind resources - notoriously so for the North Sea, where winds average between 9 to 11 m/s at 100 meters above the surface. And so, that's where the wind turbines are going, using turbines with capacities ranging from 3 MW to 7 MW, despite the pain and high cost of installing them. And since the North Sea is pretty shallow, these units will be installed on foundations attached to the seabed and sticking about 45 feet to 60 feet above the average surface of the water (wave height considerations).

At present, the UK has more offshore turbine capacity installed than any other country - almost 1.8 GW, and 11 of the biggest 25 offshore installations are located in British waters. And there are very impressive amounts of offshore wind turbine arrays being installed around the British Isles, including the 1 GW London Array. However, Germany will soon be catching up, with several 400 MW sized installations, as well as a recently announced 576 MW (96 x 6 MW) project by Vattenfall costing nearly $US 2.6 billion - see http://www.powerengineeringint.com/articles/2011/11/vattenfall-to-build-576-mw-north-sea-wind-farm.html. Jobs, Jobs, Jobs.... most of them difficult to outsource, and ones where quality counts (and this excludes China a significant extent).

Here is another summary of this event by one of key participants - http://www.eurotrib.com/story/2011/12/2/162029/490. It is centered around the second major floating turbine demonstration - this one of a 2 MW Vestas V80 wind turbine attached to a triangular floating support, installed offshore of Portugal, where waters are deep, but winds are generally impressive. The first one was the "Hywind" floating spar unit installed in 180 meters of water in Norway, using a Siemens 2.3 MW turbine (summer of 2009, and still going strong). There is a huge potential combination of near shore, deep water, fast wind arrangements where the traditional offshore foundations (monopile, tripod, gravity caison, jacket) that will only work in depths up to 50 meters are not appropriate in deeper water. In the Great Lakes, this especially means Lakes Michigan, Ontario and Superior, where floating turbines would be a great way to make electricity. Most of the entire west coast of the U.S., and a lot of the Gulf of Maine, are also perfect for floating turbines.

So in conclusion, how's the local job scene on the southern side of The Great Lakes these days? Not so good, right? So much potential, so much underused capacity to build stuff, so many people who could be making and installing non-polluting offshore wind farms, and onshore ones, too, but who instead are also being treated similar to the bug on a windshield, only maybe with less respect. And yes, all those offshore wind arrays will probably raise the price of electricity a bit, but the job creation, the benefits of making electricity without pollution (especially nuke fallout...), and alleviating the need to export massive troves of treasure to pay for imported fossil fuels more than compensates for the higher price.

And unlike the U.S, most of this offshore electricity will be sold without subsidies and on a cost plus reasonable return basis, with prices set via Feed-In Tariffs or the result of long term Power Purchase Agreements from successful bidders on these projects. As it turns out, when you get efficient with electricity and concentrate on the jobs made by manufacturing renewable energy systems, the economic benefits vastly outweigh those from cheaper generated electricity prices. And of course, a lot of those cheaper prices are a temporary mirage, all related to what are for now manifestations of natural gas being sold below its replacement cost.

How's that for a way to introduce the windiest month of the year in Buffalo?

DB

The Wind Biz at Turkey Time, 2011

2011-11-23T15:12:00.007-05:00

This is a very strange time in the wind turbine business/wind power industry. Technologically, great strides have recently been made in tapping the polar opposites of the wind energy spectrum - offshore wind (uses FAST winds to overcome the high installation cost). Meanwhile, the sales of Low Wind Speed Turbines (LWST) in the US as well as the use of taller wind turbine towers (100 meters, for example) are on a roll. For example, Vestas recently announced another project using 33 of their V100 x 1.8 MW units in Michigan (http://www.vestas.com/en/media/news/news-display.aspx?action=3&NewsID=2892) ,while RE Power announced the sale of turbines in SW Pennsylvania using "medium" speed turbines but using 100 meter towers (http://www.repower.de/en/presse/press-releases/detail-press/?tx_ttnews%5Btt_news%5D=3558&cHash=f1811f56217a469104fc35ba401242a7). These are both ways to produce more electricity from a given site which happens to be reasonably close to large load centers (Detroit and Pittsburgh, respectively). GE now has over $500 million in confirmed sales of their LWST, the GE 1.6 MW x 100 meter rotor, and only a few of them have been installed to date. Vestas also announced 1000 MW of their V112 - a 112 rotor diameter x 3 MW rating - (now closer to 1.5 GW), worth about $4.5 billion in new sales, just for the turbines.

In the U.S., almost all of the wind turbines that are likely to be installed for the next several years have now been ordered, and construction is underway so that they can qualify for the Section 1603 grants (where 30% of the cost of the project is paid to the owner instead of them using the Production Tax Credit (PTC)). Perhaps 10 GW or more worth of turbines will get installed next year, and it looks like close to 8 GW could get installed this year. Unfortunately, on December 31, 2012, all of the incentives (mostly tax avoidance schemes available to only ultra wealthy people and corporations) will disappear, as so far the new crop of Republicans in Congress show no willingness to extend them. This will not mean that coal or gas fired units will replace them - and no new nukes are on the Horizon except for the twins in SE Georgia (Vogtle). It's just that without the net 3 to 5 c/kw-hr subsidies, new projects (which make electricity for between 8 to 13 c/kw-hr on a completely unsubsidized basis) cannot compete with electricity from old coal plants selling for 4 c/kw-hr or less. Instead, old coal plants will continue to be used. So, the wind turbine industry, and with it about 80,000 jobs, goes into hibernation until the equivalent of a Feed-In Law, mandated Power Purchase Agreements or new subsidies gets authorized.

One nifty example of the recent dash for installations might be near Sacremento, where the Sacremento Municipal Utility District (SMUD) is adding 128 MW of new wind capacity - 24 x 3 V90 MW units (fast winds) and 31 x 1.8 MW V100 units (slow winds). SMUD is a governmental utility (get the hint, Jamestown, NY?), and this will double their capacity to produce electricity from wind (http://www.vestas.com/en/media/news/news-display.aspx?action=3&NewsID=2418). Well, good for them, and phooey on Jamestown, NY, who are still lusting for a 50 MW coal burner to supply an average of about 5 MW of their electricity not supplied by NYPA. SMUD will take advantage of the REPI incentive, worth about $9 million per year for the next 10 years...

Meanwhile, one of North America's largest proposed offshore wind projects - the NaiKun project in British Columbia - still keeps on going. The market for this electricity - from the extremely windy Hecate Strait (about halfway between the Washington-BC border and the Alaska-BC border) in British Columbia - would probably be California. See this for details (warning, a 60 page report): http://www.haidanation.ca/Pages/Splash/Documents/Independent%20Evaluation_Tom%20Gunton_August172011.pdf. And there is this wind map of the region: http://www.offshorewind.biz/2011/11/23/naikun-updates-information-on-wind-project-relocates-office-canada/. Average winds look to be around 9.25 m/s at hub heights or more.... and will have twice the energy of the winds in the Cleveland, Ohio offshore project (about 7.5 m/s for this 20 MW pilot project). Of course, there are actually nearby customers for the Lake Erie project, while the NaiKun project might need at least 500 miles of new transmission lines...

Worldwide, the European banking system looks like it is headed for collapse, and mostly because of Germany's outrageous success, no less. Germany has become a major exporter, and especially with renewable energy systems, despite or because of the high wages workers get paid. It keeps racking up balance of payments and budgetary surpluses, because other countries in Europe keep buying their stuff. Of course, if these other countries DON'T keep buying German stuff, the German economy will also go down the tubes really fast, but that fact keeps getting ignored. One country's surplus is another country's deficit, after all. So what has happened to all of the surplus money? German banks went and bought up a lot of the debts of other European countries (Sovereign bonds), and in the case of Greece, Italy and Spain, their value is going away fast. And unless some means of recycling this money is arranged, real fast, things will seize up fast, especially in the investment banking (and that's what finances wind projects) sector. It affects America significantly (some of our banks are also in deep trouble with Sovereign bonds) because most American big banks no longer "do" project finance - in this country, that task is mostly done by European banks. "Oops" is not just for Rick Perry these days...

The last area of growth in Europe largely untouched by the man-made Eurodebt crisis seems to be offshore wind projects. There is something like $US 30 billion under construction, and a tremendous amount of the construction infrastructure has been built. And now that Germany is dumping its nukes, offshore wind is one way that hope to close the gap. Rumor has it, Korea and japan will soon be following suit - dumping nukes in favor of offshore wind. Anyway, to get an idea of the scale of this, check out this story of how an existing 300 MW wind farm in England is getting refinanced with long term, low risk money: http://www.offshorewind.biz/2011/11/23/eib-funds-thanet-offshore-wind-farm-uk/.

Note: there is a big opportunity for a quality underwater electric transmission line manufacture - European companies can't keep up with the demand. So, any American companies want some extra business? Voltage ratings in the 35 kv and 150 kv range, power in the 50 MW to 150 MW range...

Finally, on the money front, check out this article recommended by Paul Krugman: http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.25.4.165. It recommends a top marginal tax rate (on the really really rich/high income types) of 70% - this will push more money into things like wind turbine investments and less into useless gambling on Wall Street. That is the estimated top tax rate on rich people that will maximize economic growth for our country, and also maximize governmental tax revenues (so we don't have to feed old folks catfood in lieu of decent Social Security checks that would allow them to buy decent human food). After all, we would not like this future to come about:

from http://my.firedoglake.com/somethingthedogsaid/2011/07/19/conrad-coburn-and-cat-food-ii-oh-my/

One synergistic effect with the old, soon-to-be extinct US wind subsidy system is that a 70% marginal tax rate means that you can avoid a lot more taxes for the same wind turbine investment - especially via the MACRS arrangement. And thus, high income tax rates on the super rich means more jobs for those making and installing wind turbines, as well as faster returns on invested capital for wind turbine project investors.

Who knew.... So, maybe you can write your representatives between now and Christmas...?

Images from Vestas (http://www.vestas.com)

DB

Living on Booze Power

2011-11-21T11:17:00.008-05:00

from the You-Tube http://www.youtube.com/watch?v=Xsc40niu9Uk&noredirect=1

Introduction
First off, apologies for this cringing pun - Eric Clapton's version "Living on Blues Power" is a great song. But, we're talking Ethanol here - and the worst drug that Mr. Clapton ever tried to kick was EtOH - for him, it was worse than heroin. But then he had affluence problems - he did not have to worry about whether he could afford his booze for a long time. And combine an addictive personality, lots of friends who also loved to imbibe, a yearning for the fun that booze can bring about (as well as rumored looseness in some women) and an unlimited bank account - that can make for a whole lot of ugly, over time.

Actually, with regards to liquid fuels, the USA shares a lot in common with Eric's permanent alcoholism problem. It was fun before it became a serious problem, and the signs that we should be looking for other ways to get around (and/or have fun) have been around for some time. And both addiction to liquid fuels and alcoholism (and lots of other "ism's") are dopamine based behaviors that get reinforced over time, morphing into a situation where continued use merely puts off the pain of not indulging in EtOH usage. They (intoxication/maintenance of the buzz and fuel usage) have a lot in common, including the disturbing tendency to do ANYTHING to keep on getting that fix, and to keep using even when the consequences can be very negative (Global Climate Change for the CO2 pollution associated with oil combustion, and the huge money/income/wealth transfer from most Americans to the fuel suppliers (= pushers, dealers)).

But, apparently Mr. Clapton kicked the EtOH "monkey" off his back a while ago, though it was not easy. Meanwhile, our country is just as firmly in denial (the mighty wide river called "De Nile) about liquid fuels - most of which are fossil based - as ever, and in this case, Ethanol is not the villain. Actually, it has bought us some breathing room, lessened our export of money for imports of oil, mitigated what is effectively a massive, regressive sales tax BY CORPORATIONS AND SOME FOREIGN COUNTRIES on the public and on governments (Federal, State, local) which are (and on occasion, they actually behave that way) supposed to behave as representatives of the general public, and not just the really wealthy fraction of the public.

So, right now there is a convoluted subsidy paid to those who produce EtOH made from biomass (in the US case, mostly corn) and indirectly to those who grow these crops that provide the sugars that the EtOH is made from of about $6 billion a year. The savings to the public are rather large - about $55 billion per year in fewer oil imports, and about $208 billion/yr not "donated" to companies that sell gasoline/oil in the US. Or more... And also on the plus side, the equivalent of about 70 million TONS/yr of sugar is removed from American diets (that gets made into EtOH and CO2) while 35 million tons/yr of high protein (DDGS) food product is co-produced. The high ammonia usage of corn gets converted into protein - it's how the "amino" gets put into "amino acids", and protein is a very valuable part of foods.

Discussion
So, spending $6 billion/yr of taxpayer money to avoid having the general public spend an extra $55 billion on imported oil at an average price of $100/bbl - why is this even the least bit controversial? And also, why is this a mystery to most, including a lot of Grade A Certified Environmentalists? Maybe it's all in how it is phrased, as well as the general ignorance of the American public when it comes to even simple aspects of the chemistry of food... like the big difference between protein and sugars, or the small difference between sugars and low molecular weight starches (like those in corn). Of the 13 billion bushels/yr of corn we harvest, about 5 billion bushels/yr are used to make a combination of EtOH, CO2 and DDGS.

Here's how it works. Right now, we produce a bit more than 900,000 bbls/day of EtOH, and this is added to about 8.6 million bbls/day of petroleum derived gasoline to make about 9.5 millions bbls/day of car fuel (see http://ethanolrfa.org/pages/weekly-ethanol-feed-production). That 0.9 million bbls/day (mbd) of EtOH is equivalent in energy content to close to 0.6 mbd of gasoline (all petroleum derived). EtOH also adds octane (pure EtOH has an octane rating of 113) and allows the hydrocarbons in the car fuel mixture to burn cooler and with less air pollution, but let's concentrate on the energy for now. In order to make 0.6 mbd of gasoline, a lot more crude oil would be needed. Various crudes yield differing amounts of gasoline; "light sweet crude" (Gulf of Mexico, or GOMEX derived, for example) can deliver about 22 gallons of gasoline per bbl of crude, while Tar Sands sludge, even the "upgraded" Syncrude, only can provide about 10 gallons per 42 gallon bbl, while California, Saudi Arabian and Venezuela "heavy crudes" can deliver around 15 gallons/bbl. The percentage of the crappier grades (heavy crudes, tar sand sludge) is increasing in the national "mix"; these tend to be cheaper, too, than the high quality light crude oils (see http://www.nrcan.gc.ca/energy/sources/petroleum-products-market/1519 for an explanation of this in more detail). On average about 2.5 bbls of crude are needed for each bbl of gasoline (40% yield). The US tends to be a net importer of gasoline and a net exporter of diesel due to our ability to refine "from the bottom of the barrel" feedstocks. And then there is that big petroleum secret - done correctly, the volume of products from a refinery often exceeds the volume of inputs - oil is sold by volume, not necessarily by mass. Cracking big molecules like asphaltenes into gasoline increases their volume/lowers the density, especially when the extra hydrogen needed to do this is provided by the reaction of petroleum coke and water. But it's a secret, so... mum's the word, OK?

In summary, getting the energy equivalent of 0.6 mbd of gasoline would need a crude oil input of 1.5 mbd. And at $100/bbl, that's a cool $150 million/day of avoided imports, or close to $55 billion/yr.

There is another aspect to this, also good. The US now consumes about 19.5 mbd of crude oil, which is about 25% of all the oil extracted worldwide. However, we now import around 11.2 mbd of crudes - see (or switch to monthly mode) http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm, which means we now supply about 8 mbd (see http://www.eia.gov/dnav/pet/pet_sum_snd_d_nus_mbblpd_m_cur.htm). If we had to buy an additional 1.5 mbd of crude oil off of the international market (in other words, import it), this would mean that either the world would have to come up with another 1.5 mbd on top of the 74 mbd now extracted, or more importantly, the US would have to compete with the other importing countries for some share of the approximately 42.6 mbd that is exported - see http://www.graphoilogy.com/2011/10/daniel-yergin-massively-reduced-his.html#more. More likely, the latter would take place by outbidding those with either less money or less credit, and in turn the price of exported oil would shift upwards. Each shortage of ~ 1 mbd (or increase in demand) raises the price of oil about $20/bbl, so an increase in demand of 1.5 mbd would crank up the world oil price by $30/bbl.

Another way to view it is via "price elasticity" - alias PE - see http://blahla.wordpress.com/2007/10/29/price-elasticity-in-the-real-world-oil-prices/. In this article, PE for oil , defined as the ratio of the change in supply to the change in price is about 0.1. So, changing the supply by 1.5 mbd is changing it by 3.5%. In turn, this would raise the price of oil by 35% (from roughly $95/bbl to near $128/bbl. These two estimates are pretty close. In the long run, this price spike would result in less petroleum usage by the US - we are down from 21.6 mbd in mid 2008 to around 19.5 mbd, which is good, but it takes a while for this to happen, and that is not good. Of course, this would probably trash our fragile economy in the process.... as occurred in 2008, where the high price of oil became, in effect, the final sack of cement loaded on the proverbial camel, and the one that broke the proverbial camel's back...

Anyway, raising the total crude price for oil by $30/bbl would be a $585 million/day defacto tax by US oil corporations and the countries/companies who supply that oil on both American consumers and American governmental entities, such as all governments, school districts, transit authorities, etc. This adds up to real dollars - about $214 billion/yr, and it would up out money exported from $420 billion/yr (11.5 mbd * $100/bbl) to $617 billion (13 mbd * $130/bbl), or $197 billion MORE than the already obscene $420 billion/yr. You can thus end up exporting $197 billion/yr more than we presently are exporting for oil by importing another 1.5 mbd of crude oil - and not the good stuff (light sweet crude) but probably "Saudi sour heavy crude", which the KSA cannot presently sell because most oil refineries in the world are not presently set up to handle. If you feed sour heavy crude into an oil refinery designed for light sweet grades, that $20 billion refinery will get trashed and made inoperable in just a few months...

The US EtOH industry is supported by about $6 billion/yr in taxpayer subsidies; all this allows the price of EtOH sold into the market to be $6 billion/yr less than it would normally be. However, this is definitely "small potatoes" compared with what would happen otherwise. The demand for corn to make EtOH is about 5 billion bushels/yr, and at an average yield of 175 bushels/acre, this means that without this demand for corn, 28.5 million acres less of corn, worth $32.5 billion, would not have been planted (about 90 million acres/yr is planted for corn in the U.S.). Of course, that would completely tank the price of corn (now $6.50/bushel, or about 11.6 cents/lb), and the most immediate victim would be.... third and fourth world farmers, who would be put out of business when the US decided to dump excess corn onto the world market at $2.80/bushel (5 c/lb) - this actually happened in 2001-2003, wreaking havoc on Mexico's farmers. However, this also would effectively tank the US rural economy, followed by tanking wheat, soy, and milk prices, but with the ultimate consumer experiencing essentially no benefit. And after a year or two of negligible farm production, serious price spikes for food would result until various economic equilibria are more or less re-established. After all, you can't go without food production for too long before lots of people notice there is little or no food available at any price...

According to this report (http://www.ethanolrfa.org/news/entry/university-report-ethanol-reduced-gas-prices-0.89-in-2010/), US consumers saved an average of 89 cents/gallon for their gasoline via all this homegrown EtOH. And according to this report, about 500,000 jobs have been created in the US farm-EtOH-equipment complex: http://awakeatthewheel.net/2009/12/10/500000-jobs-created-by-u-s-ethanol-industry/. However, maybe you think we don't have enough unemployment, or that those 500,000 people would actually have other viable means of employment. In that case, can I interest you in Enron bonds, which are generally considered worthless? But hey, if you believe those employed in the EtOH to fuel business have other means of economic viability, you'll probably believe anything...

Conclusion
As it turns out, it is unlikely we can grow sufficient crops to make an additional 13 mbd of EtOH. And while various people deride all the effort to grow crops and then extract the sugar and starch and convert it into fuel (EtOH), while the proteins, fats, vitamins, mineral and complex food items (fiber, enzymes, DNA, RNA, etc) get extracted as DDGS, what's the alternative? Aside from bankruptcy, and eliminating 1/3 of all farmers in the country (and there are far too few), for starts. After all, when rural times get tough, farms consolidate and get even bigger, as the remaining surviving farmers try to cut costs while they also cut output in the hopes that prices will eventually recover.

At our present gluttonous levels of gasoline consumption, we can never self supply. But let's say we employ a touch of magic, say from this cutie:

from http://sjrlc.lib.overdrive.com/312ACD2C-9CD7-42E5-B655-DE8E61E7DDAE/10/420/en/ContentDetails.htm?ID={FC341246-2BD2-4C1C-AE25-8A08FB334BAE}

Let's pay her those exorbitant union wages, and wish for a car fleet that get an average of 42 mpg, like the ones that exist already in Europe and Japan. And presto! That would cut our gasoline consumption to roughly 5.0 mbd, and we would only need to use roughly 4.1 mbd of gasoline, this effectively gets rid of the need for most imports of crude oil, and would up the biofuel content of gasoline to roughly 18% from the present 10%. And with the higher octane fuel, we could actually increase the compression ratio of the engines, resulting in still better fuel economy...

Next, lets say that we travel only half the number of vehicle miles in fuel driven cars as we presently do. So however this gets done - more electric mass transit, more ride sharing, more electric or plug-in hybrid cars, more examples of sensibly locating residence near the workplace, or at least near a transit line, that would drop our automobile fuel consumption to near 2.5 mbd, and with an EtOH content of near 36%, 100 octane or better fuel should be available. And higher octane leads to higher compression ratios, which means that you can get more work from a given gallon of fuel. The Scania high compression all EtOH engines (see http://www.scania.com/Images/P07X03EN%20New%20ethanol%20engine_tcm10-178705_81054.pdf) get about 42% of the fuel energy out as mechanical energy, versus maybe 26% for an all gasoline low compression engine. See also http://www.epa.gov/otaq/presentations/sae-2002-01-2743-v2.pdf for details on a small EtOH engine (a modified 1.9 liter VW diesel engine) running at a 19.5:1 compression ratio. Cool, with over 40% thermal efficiency possible (versus 26% for a low compression gasoline powered one). See also http://www.americanenergyindependence.com/alcoholengines.aspx and http://www.caddet-re.org/assets/no91.pdf.

And when we actually use about 2.5 mbd of liquid fuels to get around, funny things happen. But good things, too. We could actually make that much renewable fuel (probably a mix of ethanol and hydrocarbons derived from syngas derived from biomass). We do know that about 1 mbd of EtOH will still be supplied from crops, as it is and probably always will be cheaper than making EtOH from cellulose. But, no more need to waste $200 billion/yr in military protection/enforcement for overseas oil fields/oil countries. And all that money now exported (and what about 5 years from now when the price for oil on world markets is more like $200/bbl, as it doubles every 5 years..) could remain in country, doing good things for our economy.

And yes, there's even a place for wind turbines in this, as well as the replacement of all the natural gas used in boilers to distill EtOH and also to dry the wet distillers grains and convert that clay like mess into storable DDGS using corn stover as the fuel. All those EtOH facilities are also a great electricity customers. And making the ammonia to grow the crops can also be done with electricity from wind turbines (nationwide, we'd need about 69 GW of wind turbine capacity to make 18 million tons/yr of renewable energy sourced ammonia). After all, over half of the protein Americans consume is synthetic ammonia derived. And providing hydrogen to reduce the CO2 by-product from the crop to EtOH as add-ons to existing EtOH facilities also would be a great market for renewable electricity (electricity from wind turbines plus water gives hydrogen and oxygen). This would increase EtOH production by 50% using exactly the same amount of biomass grown.

Of course, if we keep pouring our money down the drain by spending it on imported petroleum, well, we won't have much left of a country, let alone sovereignty. Instead, we will get a financial coup d'etat, and somebody from Goldman Sachs will get appointed as our real leader (Italy, Greece, for starts), and the next stage of ravaging our poor and middle class can then commence. After all, any sins committed in the name of financial austerity really are good for us, and should probably be redefined to get any semblance of morality out of the discussion. Just ask the people of Greece and Italy...

Anyway, any comments?

DB

Renewable Energy Pricing Systems Presentation

2011-11-12T16:50:00.011-05:00

Introduction
I was given the opportunity to give a presentation to the Engineers for a Sustainable World meeting in Buffalo, NY this fall, held and sponsored by SUNY Buffalo. The file for the presentation can be seen here: http://www.4shared.com/document/NheZ7t5W/REPricingSystems1c.html; odds are, you'll have to wait a whole 20 seconds before the download starts. Anyway, this is the Powerpoint version (but in.pdf format) - in other words, a highly summarized version with pictures (generally nice to have those...). Below is an explanation of this summary.

Many thanks to the students who attended this session of the conference. The room was packed, and they seemed to have a lot of interest in this subject. And much thanks to Dr. Jensen and the many UB engineering and science students who made this a really great meeting! Of course, one of the reasons there were so many people there is because there were lots of great speakers and presenters, including a hour long super-informative one from Gary Stottler of GM with regards to the guts of electric cars - the battery systems, and how fuel cells and car battery powered cars have a lot of things in common.

BTW, the title page of this presentation is a picture of the Samso offshore wind farm in Denmark, which consists of 10 x 2.3 MW Bonus (now Siemens) units installed in about 10 to 14 meters of water. It is owned by the municipality of Samso Island and some private investors, so it is a community owned offshore wind turbine array. How cool is that? These displace about 23,000 tonnes of CO2 per year and complement the 11 x 1 MW turbines that are on the island. The offshore turbines are installed about 3.8 km (about 2.2 miles) offshore and YES, the ARE seen by island residents - in fact, the touristy aspect of these turbines was one of the minor reasons they were placed where they are now installed. See http://www.4coffshore.com/windfarms/samsoe-palludans-flak-denmark-dk01.html and http://www.appropedia.org/Sams%C3%B8_renewable_energy. The island now bills itself as "140% renewable", though perhaps that claim should be taken with a grain of salt. But, it probably is a net exporter of renewable electricity...

Discussion
If you want to find out information about U.S. electricity consumption and production, the Energy Information Agency is totally where it's at. Here can be found a humongous trove of data, but let's keep it simple with a summary of the last decade or so:
http://www.eia.gov/electricity/annual/pdf/tablees1.pdf . In 2010 (with 8760 hours in it), our country produced 4,127,648 MW-hrs of electricity (averaging 471 Gigawatts (GW)), but we only sold/accounted for 3,889,047 MW-hr/yr (444 GW average), including 15.3 GW of on-site usage (never went over the grid; mostly at large industrial customers). So right off, about 9.4% of that generated never got billed to customers. This quantity of electrical energy made annually has been fairly consistent for the last 6 years, though varying by 3 to 5% depending on weather or economic conditions.

Of that, wind provided 10.8 GW, or 2.3% of the total electricity Made in the USA, and this came from 39.1 GW of capacity (installed by end of 2009); output was about 27.6% of the rated capacity. However, between 5% to 10% greater outputs (usage rates going to between 29% to 30.4%) could have been observed if not for a phenomena called "economic curtailment", where wind turbine output is cut off whenever the price of electricity collapses due to the combination of too much wind and too little electricity demand. In a society that actually values renewable energy, economic curtailment of wind turbine output would probably not happen.... For example, in 2010, about 9% of Texas wind turbine output was restrained in such a manner...

Anyway, that's the long lead up to the premise of this presentation, which is sort of set up like a detective trying to solve a crime. The crime is that we have a such a small quantity of wind derived electricity being produced compared to what we COULD produce. Of course, the ~ 40 GW installed by the end of 2009/operating throughout 2010 represents an investment by (mostly) private investors/industry of roughly $80 billion, and some would not consider that to be small. But, this is all relative, and to make lots of electricity via ANY means, some major investments are going to have to be undertaken. For example, replacing all of the old existing nuke fleet with new ones at a going rate of about $10.8 billion per GW of capacity would mean someone has to come up with close to $1.1 trillion, and that is to make less than one fifth of our electricity (not all energy, just electrical energy). So, it's big bucks in this league, and $80 billion is barely chump change compared to what is needed. And because inquiring minds might want to know, the EIA estimates all that generated electricity was sold for about $369 billion in 2010, and that's when prices were really depressed..

At the end of 2011, we might be making up to 3% of our electricity via wind turbines. But, we could make up to 30 TIMES our present electricity production using already identified wind resources and using already in existence wind turbines. So that's operating at less than 0.1% (one thousandth) of our potential. And tapping that resource at such a tiny fraction of what we have available is hardly a stellar effort, especially given the urgent need to job creation (making wind turbines creates lots of jobs, assuming you actually have a viable market for the electricity made by these wind turbines, something that also does not exist at the present time) and the need to do something about electricity production that does not befoul our planet with either radioisotope poisoning (think Chernobyl, Fukushima) or CO2 pollution from fossil fuel combustion.

Of course, you only need to make the electricity that is being used - making an excess serves no purpose, and that IS the purpose of making electricity - of doing stuff with this energy. So we really only need to replace the pollution-sourced part of US electricity production - such as nukes, coal, oil and natural gas derived electricity (these add up to 421.4 GW in 2010). Next would come the need to replace the fossil fuel used to make heat (mostly natural gas) and for transportation (mostly oil) - equal to about 360 GW worth of electricity. After that, unless you want to convert water into hydrogen (to make ammonia or reduce CO2 into liquid fuels, for example), that's electricity we don't need to use.

Piece of cake, right? So, on to page 4...

So, why aren't we proceeding down this more logical path, one that would make for a more viable planet and one with a lot more employment, too? Is it because of a lack of money? NO! Is it because wind turbines are that unpopular? NO! How about the fact that US industry is just too busy at the present time churning out manufactured items? Yeah, right.... Is it because we can't afford the real price of wind derived electricity? NO! Although, who wants to pay even a few pennies (2.56 to be exact) more per kw-hr to non-pollution sourced electricity? Evidently, only about 70,000 of NY's more than 9 million electricity customers, and this after a decade of being given the opportunity to do so.

Or how about the fact that making mass quantities of wind turbines also makes mass quantities of jobs... is that a problem? Some ACTUALLY MIGHT think that is is a problem, but I'm guessing that most people would say the lack of jobs IS the problem, and making lots of jobs to make lots of wind turbines would be just fine....

So, onto page 5. For this crime puzzle, how about a bad renewable energy pricing system as being the culprit, or at least one of the main varmits in this ongoing tragedy? I guess you never saw that one coming... So here is my big presumption - if we had a renewable energy pricing system in NY like either Quebec (second best option) or (best option) Ontario (and because Canada and the US have differing laws about lots of things, this requires a touch of specific Federal Legislation - the insertion of Section 102 of the failed Waxman-Markey ACES law (2009-2010) - all 132 words - into Section 210 of the 1978 PURPA law), we would actually have significant growth and especially significant job growth in manufacturing sectors connected with the wind biz. (This "Section 102 Approach" is shown at the end of this post - it's a no cost, no need to tax anyone or anything provision). More importantly, we would be on a steady and rapid path to eliminate the natural gas psuedo-parasite from our NY economy, where more of the money goes out of NY State, and where prices paid by NY consumers act like an ultra-regressive sales tax (imposed by some private corporations, on consumers, some of who are also corporations - oh, the irony!) that is not even levied by the government! What a racket, eh?

Anyway, the rest of the presentation is pretty self-explanatory, I hope....

So, what follows is a brief explanation of how tax subsidy, quota and Feed-In Tariff pricing systems work. Oh, this could get wicked complicated in a NY nanosecond, so save your questions for later.... And I even got noted religious heroine Church Lady on my side to drive home a point on how unfair some of the existing arrangements are in our U.S. renewable electrical energy pricing arrangements are, though they ARE better than nothing....

And, for those who like them, some references are on page 13. And to wrap it up a nice picture of the brand new and now up and running Ormonde offshore wind farm, located offshore of the UK between England and Ireland. This one uses 30 x 5 MW RE Power turbines (remember, ones these size ARE COMMERCIAL these days and have been for some time - if you have around $10 million, you can buy one), and which will produce an average of 60 MW of clean sourced electricity. This wind turbine array will displace of about 4 billion cubic feet of natural gas per year (which the UK apparently no longer has and must import since they also have encountered "Peak Natural Gas") which the UK would have otherwise burned to make electricity and 0.367 megaton/yr of CO2 pollution. Nothing like ending on a note of hope....

So, any comments?

"The Section 102 Approach"

111TH CONGRESS
1ST SESSION H. R. 2454 AN ACT
To create clean energy jobs, achieve energy independence,
reduce global warming pollution and transition to a clean
energy economy.
1 Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,

2
1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
2 (a) SHORT TITLE.—This Act may be cited as the
3 ‘‘American Clean Energy and Security Act of 2009’’.
4 (b) TABLE OF CONTENTS.—The table of contents for
5 this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. International participation.
TITLE I—CLEAN ENERGY
Subtitle A—Combined Efficiency and Renewable Electricity Standard
Sec. 101. Combined efficiency and renewable electricity standard.
‘‘Sec. 610. Combined efficiency and renewable electricity standard.
Sec. 102. Clarifying State authority to adopt renewable energy incentives.
Sec. 103. Federal renewable energy purchases.
Subtitle B—Carbon Capture and Sequestration

53
8 SEC. 102. CLARIFYING STATE AUTHORITY TO ADOPT RE-
NEWABLE ENERGY INCENTIVES.
10 Section 210 of the Public Utility Regulatory Policies
11 Act of 1978 is amended by adding at the end thereof:
12 ‘‘(o) CLARIFICATION OF STATE AUTHORITY TO
13 ADOPT RENEWABLE ENERGY INCENTIVES.—Notwith
14 standing any other provision of this Act or the Federal
15 Power Act, a State legislature or regulatory authority may
16 set the rates for a sale of electric energy by a facility gen
17 erating electric energy from renewable energy sources pur
18 suant to a State-approved production incentive program
19 under which the facility voluntarily sells electric energy.
20 For purposes of this subsection, ‘State-approved produc
21 tion incentive program’ means a requirement imposed pur
22 suant to State law, or by a State regulatory authority act
23 ing within its authority under State law, that an electric
24 utility purchase renewable energy (as defined in section
25 609 of this Act) at a specified rate.’’.

DB

The Cure for Fracking Gas in Western NY is Wind Turbines

2011-11-03T15:56:00.006-04:00

The picture (from http://www.ci.lackawanna.ny.us/windfarm.html), is used by permission of Lackawanna Mayor Norm Polanski; much thanks!

Note: This was written to be a feature article, but so far it has not made it that far. So, here goes....

Whether or not the Marcellus and Utica tight shale gas gets tapped in NY State is really a choice of how we want to generate electricity. For all practical purposes, methane (natural gas, alias Ngas) in our state is used primarily for space heating. And space heating is a stable to shrinking market in NY State. This is a consequence of a stable population, less industry, better insulation in homes and businesses, more efficient operations, lower temperature set-points in home and commercial settings. The direct use of methane as a fuel for transportation is very small and will likely remain negligible. Any increase in energy usage for transportation purposes probably will come from increased usage of electricity to charge electric vehicles. In general, any growth in Ngas consumption in NY (and also much of this country) is only likely through its use to make electricity (see http://www.eia.gov/dnav/ng/hist/n3045ny2a.htm for reference data).

Fracking sourced gas is more expensive than “conventional” natural gas. The price needed to cover all production and waste disposal costs plus provide the profits needed for such investments is now far greater than the is the current Henry Hub spot market price, as well as the listed NYMEX “futures prices” for the next 5 years. Investors in such wells/projects would lose massive quantities of money and wealth at present natural gas prices. However, those supplying the tools of the trade (drilling rigs, pumps, trucks, drilling muds, diesel oil for diesel gen-sets, fracking chemicals, etc.) will do just fine, once the problem of the massive losses by the gas field developers and Ngas producers is overcome. If by some chance the price for this fracked methane hits the targets recommended by bankers who finance such efforts (such as Credit Suisse), then another squeeze will occur. At such Ngas prices, it is becomes less expensive to produce electricity using commercial scale wind turbines that are “tuned” for NY State winds, even if there are NO or minimal Federal wind energy subsidies involved.

Because of the way that electricity is priced in NY State, the “extra” profits (and sometimes the “regular” profits) of companies using old nukes and old coal burners to generate electricity are dependent on having at least some natural gas sourced generation “in the mix”. Even at the present highly depressed Ngas prices with very efficient combined cycle generation systems, Ngas is the more expensive option to make electricity, with a production cost almost twice that for large coal burners or any of NY’s six nukes (and all of these pollution based approaches – coal, Ngas, nukes - have huge subsidies associated with them, notably no CO₂ pollution cost or the Price-Anderson Act that limits liability in the event of a nuclear accident). When no Ngas sourced electricity is “in the mix”, electricity prices tend to fall to “minimal profit” status, which is a bad state of affairs to their corporate owners (they are in it for the money, after all). When wind turbine sourced electricity is added to our regional grid, Ngas sourced electricity is displaced first (as it is the more expensive electricity bid in for a given hour), and this drops the electricity spot market price. In Europe, electricity prices can go negative during major wind events, where pollution sourced electricity producers temporarily actually have to pay someone to take their electricity. This process is known as the Merit Order Effect.

So, if you want your natural gas based heating costs to remain low, use less Ngas. Less Ngas consumption also leads to lower Ngas prices, because the price for Ngas is very sensitive to the supply-demand balance. Nationwide wellhead prices in 2009 were less than half of those in 2008, yet demand in 2009 was not quite 2% less than in 2008 – that should give you an idea how “touchy” Ngas prices can be. Longer term, the best solution is to get rid of the Ngas based heat, using solar hot water, passive solar, active solar thermal and/or electricity (resistance or heat pump) systems. This will keep the demand for Ngas dropping over time, which also could match or exceed the decline in our North American methane reserves. And the other way to keep Ngas prices low is to use less of it to make electricity. This strategy is working, too, at least in WNY. Last year, Ngas only provided 2.6% of the electricity that was sold in NYISO Zone A, while wind turbines provided 4.8% of our electricity. A couple more wind farms in our part of NY will mean that Ngas no longer will be required to make electricity in NYISO Zone A, and at that point, any additional electricity from wind turbines will start to displace coal sourced electricity.

This is not to advocate for the use of coal or nukes to make electricity. In NY State, wind can be the prime energy source needed to replace such pollution based approaches at a reasonable price. The by-product of such an approach would be a massive increase in real wealth creating manufacturing jobs, as well as the required installation jobs and associated support/service jobs. And who would argue against the equivalent of another auto and steel industry (circa 1970) in our neck of the woods? The intermittency issue (of wind, resulting in a temporary mis-match of the variable supply and variable demand of electricity) is easily dealt with via pumped hydroelectric storage, stored biomass fuels plus interconnections with Quebec, Ontario and New England. Installation of more pumped storage systems (there are three of them within 100 miles of Buffalo) is also a great Keynesian stimulus, too; these provide a significant increase grid stability and dependability, at a minimal price.

Let’s use the medical analogy for a bit, where fracking for Ngas and associated hydrocarbons (natural gas liquids, gas condensates, crude oil) is considered an addiction. Fracking involves going after the dregs of hydrocarbon supplies – you only do this when the easy to get, formerly more plentiful “conventional” supplies of buried methane (natural gas) are used up or in the process of being used up. Far from tapping the “mother lode”, this fracking is an admission that you are going after the tail end of supplies. After all, what existed before 1800, when we began tapping them in earnest, was finite, not infinite, even though it appeared to be infinite back then. As far as oil goes, by 2006 we had burned through over half of the “conventional” supplies. Ditto for conventional methane supplies in North America, although that peak happened around 2000.

Making methane at current usage rates requires a lot of effort and our homemade “fracked” stuff is not cheap to make..., but it is cheaper than hydrogenating CO2, or converting cellulose and lignin into methane via "bio-syngas" approaches...

Clearly this is not a sustainable path; instead, it is a downward spiral. But life as we know it in NY State is one based on energy, and of three major forms, too – for transportation (oil), heat (mostly natural gas) and electricity. The electricity portion can be made at reasonable cost in NY in only a few ways – hydroelectrically, with nukes, burning coal or Ngas, burning biomass and biogas, wind turbines or near Long Island, via tidal and ocean wave energy. These forms of energy are somewhat interchangeable – for example, electricity can provide some transportation energy and all heat, but that heat tends to be pricier than when the heat is sourced from natural gas. As for 5 or 10 years from now, who knows what the price of natural gas might be – or exactly what the damage to our planet’s climate control system will bring out with weather disasters for that year.

Here’s the bottom line. Electricity is the only domestic growth market for Ngas in NY, but any new electricity demand can easily be displaced by a combination of wind turbines and pumped hydroelectric energy storage. Next, any “old” demand for electricity made by gas can also be replaced by wind turbines and pumped hydro, as can coal and nuke sourced electricity. And finally, the use of Ngas for space heating can also be replaced via existing, known means. All these alternatives to burning natural gas create a huge demand for new products and labor, something that is vitally important these days. Our hydrocarbon reserves will not last forever.

Fracking is a route to a very insecure and financially disastrous future. After all, spikes in Ngas prices can be quite ruinous for most, while benefiting only a few. But if you want such a future, with a few years of cheap Ngas prices achieved through socially and environmentally short-sighted policies, use more Ngas to make electricity now. If you want to destroy the motivation to frack in NY State, use less Ngas, and keep shrinking the quantity used in NY’s electrical mix. Since fracking will require higher prices for the methane than we are presently paying, and the only way to keep Ngas prices low is to use less Ngas, use less Ngas! And don’t buy the line about Ngas replacing coal or nukes for electricity production. Nobody will build new nukes or new coal burners – electricity prices north of 15c/kw-hr (coal) to 20 c/kw-hr (nukes) will be needed, and that assumes existing subsidies for these polluting approaches are continued.

Yeah, wind energy has a big drawback – you can see how your electricity is made. And to do wind on a large scale in the most cost-efficient way, we will need to use either a Ontario-like (Feed-In Law) and/or Quebec style (where NYPA signs up lots of long term Power Purchase Agreements) renewable energy pricing systems. The existing renewable energy pricing system in NY is obsolete, and continued adherence to it will maximize the probably we get fracked big time. And for good measure, a large scale renewable effort also will create a lot of manufacturing jobs in NY.

Oh well, I could live with seeing how my electricity gets made, and seeing my neighbors actually able to get viably employed. How about you?

Dave Bradley and (awesome editing by) Derek Bateman

Halloween Special - Energy Payback and Bats

2011-11-01T13:44:00.007-04:00

From http://www.nakedcapitalism.com/wp-content/uploads/2011/10/Screen-shot-2011-10-31-at-4.38.15-AM.png

Introduction
One way to measure the effect of adding various types of renewable energy is to do a Life Cycle Analysis (LCA) on the product. These add up all of the energy (some or a lot of which involves CO2 pollution) that goes into making the product, as well as doing other evaluations (how much water gets consumed, does it contribute to Ozone depletion, water pollution, are there toxicity issues associated with the manufacture of the product as well as the intermediate parts/components used to make the product). Many of these can become a very long and involved analysis.

One example of an LCA for a commercial scale wind turbine is one done for the Vestas V112 x 3 MW product - see http://www.vestas.com/Files/Filer/EN/Sustainability/LCA/LCA_V112_Study_Report_2011.pdf, which is an 84 page (and summarized one at that, too) paper on the product. In their example, a wind farm with 99 MW capacity in a windy location (average wind speed is 8 m/s) with an average net output of around 43.3% would have an 8 month energy payback, while one operating in a slower wind speed region (7 m/s, with a net output of 34%) at 84 meters above the ground would have a payback time of 10 months. This is about as good as it gets for renewable energy these days, and almost an order of magnitude better than photovoltaic panels (around 6 years for them to hit "payback").

Summary
A payback of 8 months for a turbine lasting 20 years means that one unit of pollution sourced energy (mostly for steel and concrete manufacture) would provide 30 units of renewable electricity over that 20 year period. If the turbine lasts for 24 years (quite likely), the payback is 36:1. With the lower wind speed region examined, the paybacks become 24:1 and 28.8:1. Many of these turbines should be able to outlast reasonably modern wind turbines, and certainly outlast the very primitive ones installed in the early 1980's.

Another important aspect in the life of a wind turbine is recycling. Up to 80% of the V112 x 84 meter tower can be recycled - especially the steel, copper and aluminum. Most of the plastics (paint, wire insulation, nacelle enclosure and especially blades) would need to be incinerated. The concrete foundation can also be recycled as road or roadbed. The greater the amounts that can be recycled, the better the LCA becomes, and the quicker the energy payback becomes for a given wind resource.

The V112 is an example of the latest "medium speed" wind turbine generation. The 56 meter rotor gives a swept rotor to generator capacity ratio (power ratio) of 3.28m m^2/kw, so this is not designed for low wind speed regions (wind speed less than 7 m/s). With an 84 meter tower, the tip of the wind turbine blade is at most 140 meters above the ground (and at minimum 28 meters); this is about as big a single piece blade (54.6 meters) as can be transported by rail and truck. Taller towers (95 and 119 meters, the latter being a hybrid with a lower concrete and an upper steel section) can also be used, which allow faster winds (and produce greater power production) to be tapped. Due to the slow rotation rate that comes with a larger turbine, this unit comes with a four speed gear reducer, and a choice of permanent magnet or traditional doubly fed induction style generator.

Over 1 GW of wind turbine capacity of the V112 for onshore uses (334 wind turbines) has been ordered to date; the first ones to be installed were recently shipped from Denmark to Australia. This turbine also was designed for "moderate" offshore winds - not the blazing gales in much of the North Sea, for example, where turbines with a power ratio of less than 2.5 m^2/kw are used). Very recently, 89 of these (267 MW) in total were ordered for a pair of wind farms in Sweden and Great Britain - see http://www.offshorewind.biz/2011/10/28/vestas-shares-up-after-offshore-wind-turbine-order-announcement-denmark/. These would have been ideal for the Great Lakes, and in which case they would have been made in Colorado.

Bat Development (announced near Halloween, too):
A competitor of Vestas is Nordex, which also has a manufacturing facility in the U.S. - in this case, Arkansas. Nordex recently announced development a software system that minimizes bat mortality near wind turbines - they claim up to an 80% reduction in bat injuries can be obtained. The system uses knowledge of local weather, time of day and other local factors to calculate when the greatest probability of bats coming near wind turbines is likely to take place. Bats can get injured from damage to lungs via the air pressure variations/pressure waves that develop near moving wind turbine blades and unless they are feeding they don't sense the proximity of the blades via their sonar (which is only "on" when feeding on insects). When a certain high probability level for nearby bats is calculated, the turbine gets shut down and then gets restarted when the bats "retire" and/or wind speeds speed up. Bats are unlikely to be feeding when winds exceed 6.5 m/s - too hard to track down food. The developer of the product, Biotope, claims that power production is only likely to be affected by about 0.2 % - see http://www.nordex-online.com/fileadmin/MEDIA/Kundenzeitschrift/EN/Nordex_WPU_33_en.pdf.

Conclusion
So, a less scary world for bats, and a less scary world with respect to Greenhouse Gas pollution, all on Halloween. The only really scary thing is that NY does not really have a sane electricity pricing system - see here for some of the 2008 numbers, when, for example, the owners of the Dunkirk and Huntley coal burners got an 81% return on their investment: http://www.scribd.com/doc/22323398/New-York-State-Electricity-Plants’-Profitability-Results. So not only can pollution based energy producers "chow down" on their consumers ignorance of the complexity of the NYISO system, we also can't afford to install wind turbines without really significant "incentives". For example, the 74 MW Hardscrabble wind farm, NY's newest, could use up to $160 million in Federal grants (Section 1603) and tax deductions (MACRS, interest paid on loans), and it could also be the beneficiary of $42 million in NY's RPS (Renewable Portfolio Standard) awards form NY State, meaning that the Iberdola Corporation might get the wind farm for free, after a convoluted 10 year process.

Bottom line: essentially no wind turbine manufacturing so far in NY State despite 1349 MW of installations, representing an investment of roughly $2.7 billion. Obviously, that leaves a lot of room for improvement. And it is roughly 10% cheaper to make them and install them nearby, as long distance transportation can add 10% onto the installed cost. That's worth close to 1 c/kw-hr....

To me, that's scarier than what the candy-searchers are dressed up to be.

Industrial Wind - Really, and Proudly So

2011-10-19T09:29:00.004-04:00

Heading east from Cleveland....

If you travel from east of Cleveland to west of Cleveland via I-90, there is a new sight that comes up in the town of Euclid, Ohio (which is a couple miles east of Cleveland). At the manufacturing facilities of Lincoln Electric, a brand new 2.5 MW wind turbine on an 80 meter tall tower just got installed this summer. Lincoln manufactures welding systems of all kinds, and a lot of welding is used in wind turbines, notably in the steel towers and in the nacelle. And so this might be blatantly self-serving, but this is also good business by Lincoln Electric - see http://www.lincolnelectric.com/en-us/company/Pages/company.aspx

For some nifty picture of the turbine, see http://tmi.digitalcolorinternational.com/index.php/2011/06/16/graceful-lincoln-electrics-wind-turbine/

The wind turbine is made by Kenersys (now an Indian owned company, as some Indians bought out the German Kenersys company). The Kenersys wind turbine was designed in Germany by some people who used to work at other wind turbine companies (and if any US company wants to, they can purchase these plans for a small fraction of the cost needed to design one from (more or less) scratch). Of course, you can also purchase a design for wind turbines from AMSC (formerly American Superconductor Company) and their European subsidiary, Windtec (see http://www.amsc.com/windtec/index.html). In fact, almost all Chinese and Indian wind turbine companies, or companies that make these (and to some extent, India's largest wind turbine company, Suzlon, who also own most or all of RE Power) have purchased European technology (notably German, Danish and Dutch). This can also come with the DESIGN OF THE FACTORIES needed to manufacture the towers/blades and/or nacelles, and some key major components.

So, the only excuse for American manufacturers not making more turbines is.... bad renewable energy pricing systems in the U.S. After all, who wants to plunk a bunch of money down and then lose it all? There is now over $2.5 TRILLION in corporate cash stashed in banks earning miniscule interest rates, supposedly "looking" for a viable investment opportunity, so lack of money does not cut it as an excuse, but the lack of a viable investment that this money could buy is VERY REAL. By the way, that $2.5 trillion would be buy 1,000,000 MW to 1,250,000 MW of wind turbine capacity (depends if it is "regular" or Low Wind Speed Turbine - LWST - designs), or roughly equal in output to the present average consumption of electricity in the U.S. Of course, if all that presently unused cash was actually used for something productive which increases the real wealth of our country (as wind turbine manufacture and installation does), then there is a multiplier effect on our national wealth and well-being, as well as some serious job creation that would take place if this "project" of using that stashed booty for something useful was to happen over, for example, a 20 year period.

Here is a bit about Kenersys: http://p57320.typo3server.info/KENERSYS-Profile.23.0.html and
http://p57320.typo3server.info/Synerdrive-Technology.21.0.html. According to this article (http://www.ien.com/ienblog.aspx?id=168128), the tower was made in Nebraska, the blades in Poland and the nacelle (and probably most of the parts in the nacelle) in Germany. The K100 x 2.5 MW unit ( see http://p57320.typo3server.info/K100-2-5MW.20.0.html) has a 100 meter rotor, and with a "power ratio" of 3.14 square meters per kilowatt of generator capacity, this qualifies as a regular to fast wind speed turbine. It is estimated to supply about 10% of that manufacturing facility's electric needs, or between 500 to 750 kw on average. This is a pretty large manufacturing site (5 major buildings), with a combined electricity usage averaging 5 MW to 7.5 MW, and about the size of a large auto manufacturing complex.

Welding is used in so many applications these days, and it is integral to modern manufacturing societies (ships, cars, pipelines, buildings, factories, roads, railroads, for example). Industry and our society as we know it is not possible without the ability to join metal parts together by welding, and just about every kind of metal can be welded under the right circumstances. So, Lincoln Electric and the community of Euclid are rightfully proud of their new addition (and the tax breaks to Lincoln for this installation aren't too shabby, either).

In so many instances the term "Industrial Wind Turbine" is used in a pejorative manner. It is an insult, a way to instill fear and loathing, and a way instigate a knee-jerk automaton response of terror from key rural community members - especially those who approve PILOT agreements, and approve environmental reviews/zoning changes or who rule local communities. After all, most of the land needed to install wind turbines, and the windiest regions, too, happen to exist in rural areas. Just try to Google the term "industrial wind" and a litany of horrors upon "fact" and "scientific" method can be seen - or else classic examples of weaseling, propaganda, Orwellian language manipulation, framing, and how to misrepresent, confuse and obfuscate can be seen. Remember "infrasound?" How about the "spinning reserve" jive in a state like NY, where we have over 1680 MW of pumped hydro available in state (and lots more nearby) and another 1000 MW of instant hydro capacity at Niagara Falls. Wind turbine generators also have "spinning reserve", too... As for the avian arguments... mostly "gone with the wind". Now it's all down to something very subjective - sound, and more importantly, "perceived sound", and especially the argument over "who owns the view?" And as for who is financing anti-wind arguments, websites that tend to all look alike/use the same bloggers/authors and "fact tours"/slick talking points, well, sometimes you can find coal, oil, natural gas and nuke money, straight up or else often disguised as various non-profit "Institutes" (e.g. "Heartland", "Competitive Enterprise", "Cato"), "Foundations" (Bradley, Olin, Heritage) and the like. Oh well, so much for that digression...

Wind turbines that make electricity at the lowest cost are big, no doubt about it. Another term for wind turbines that make electricity at minimum real (subsidies not included) costs is "commercial scale wind turbines". Small units may be a lot less expensive (a few thousand dollars) as compared commercial scale units (a few million apiece), but when you examine the electricity production cost, small units make more expensive energy than the big boys. This Kenersys unit cost over $5 million to buy and install, and one of the key items in keeping the electricity production cost close to that made by large coal and old nuke facilities in Ohio (at about 3 to 5 c/kw-hr, also heavily subsidized and long since paid off) is the MACRS rapid depreciation tax deduction (Lincoln probably used the Section 1603 30% grant instead of the Production Tax Credit, or PTC). That MACRS incentive is worth over $2 million in avoided taxes in the next 6 years, but that is the way the U.S. chooses to make wind turbines economically viable, or at least less non-viable. However, the U.S. system is vastly inferior to pricing systems like Ontario's or Quebec's.

This new turbine at Lincoln will replace purchased electricity, as it is a "behind the meter" use displacing electricity that includes the connection and transmission cost, as well as the cost to make that electricity elsewhere. The electricity made by the K100 unit is still vastly less expensive on a real basis (subsidies ignored) than would ever be the case with solar PV, a biomass plant, or even new coal and nuke plants. And who's to say what the price for natural gas will be in 20 years, aside from "unpredictable"? However, the cost to make this wind sourced electricity will be perfectly predictable throughout the next 20 years, and probably for some time after that, too.

So, industrial wind and proud of it. If you don't like industrial, consider a place without "industrial", like, for example, Somolia. "Industrial" can buffer us from heat, cold and drought - for example, seawater could be made drinkable with either solar distillation units (welding, piping, pumps, motors, glass) or reverse osmosis plants (powered by wind turbine derived electricity) in a place like Somolia. Most of the people in that semblance of a country are now experiencing a horrible drought as well as a very uncivil "civil war" that is more or less a survival of those who have water access contest and weapons. This horrid conflict will kill millions (and perhaps the majority of those presently residing there) with either bullets, drought, famine, thirst and/or disease often brought on by those other perils. A little "industrial" could be very helpful with respect to potable water from the ocean, not to mention distributing it. "Industrial" also brings us modern forms of birth control, which prevents wild surges in human populations whenever they get food and water. "Industrial" definitely needs some societal supervison, but industrial also allows civilization as we know it to exist, including telecommunications and computers, so "tweet that!". Maybe civilization on a world awash with 6.5 billion human beings is really the target of those opposed to "industrial wind turbines". What do you think?

The 2011 Ontario Elections and Renewable Energy

2011-10-11T12:28:00.004-04:00

http://members.shaw.ca/cjgaughan/prince_wind_farm_photo_gallery.htm
The Prince Wind Farm, on the shore of lake Superior, installed 2006, made possible with a 20 year Power Purchase Agreement (PPA) - owned by Brookfield Renewables:
http://www.brookfieldpower.com/_Global/5/documents/relatedlinks/730.pdf

Introduction
Last Thursday Ontario had their provincial elections, and about the only winner was Ontario's Green Energy Act (GEA). The liberals lost several seats to both the conservative Tories (PC) and to the New Democrats (NDP), who are actually a lot more liberal/progressive than the Liberals generally are.

The breakdown of votes is starkly geographical. The NDP won the north country (very industrial - mining and forestry) and some industrial areas like Hamilton, the Tories (alias PC) won the suburbs and most of the farming regions in southern Ontario, while the Liberals won big in the cities of Toronto/urban/some industrial regions in metro Toronto, Windsor, Ottawa and London. Here is a map of this: http://www.nationalpost.com/news/canada/politics/ontario-election/results.html. The net results were 53 seats (37.6% of vote) for the Libs, 37 seats (35.4% of the vote) for the PC's, 17 seats (22.7% of the vote) for the NDP, and no seats for the Greens, with 2.9% of the vote.

But, taken another way, 64.6% of the people voting in the province were in favor of the Green Energy Act/renewable energy (though many may have quibbles with it). Only the Tories were profoundly pro-pollution (coal, nukes, natural gas), nominally because this is lower cost electricity, and especially when most of the external costs of these are dumped on society and taxpayers in obscure and oblique manners.

Discussion
The GEA has proven to be a very successful way of generating manufacturing jobs, bringing in new investment and also replacing coal and natural gas sourced electricity. The bill for the GEA was passed in the spring of 2009, and officially went into effect in October of 2009, so it has only had about 2 years of application, and much of that time was spent getting contracts, doing the fieldwork needed for resource analysis and environmental permits, as well as ordering the equipment. It was particularly focused on finding jobs for the more than 100,000 auto workers who were put out of work in Ontario in the Great Recession, especially with the bankruptcy of GM and Chrysler and the squeeze on Ford. The near term goal was 50,000 new jobs in the renewable energy and energy efficiency (home and building insulation, especially) sectors.

In many cases, the factories to make major wind turbine components and solar PV panels are themselves still being constructed or are just becoming operational, such as the new wind turbine tower plant (for Siemens turbines) in Windsor that will use steel plate from the Sault St. Marie (Ont) steelworks. Next year, Ontario will install more PV panels than will states like California, which has a significantly better solar resource than does Ontario. In 2010, Ontario installed 168 MW (DC), second in North America only to California, which installed an estimated 180 MW (DC) that year; in 2011, if supply keeps up with demand, Ontario is likely to install around 600 MW (DC) of PV capacity, worth an average of about 70 MW on a continuous basis, but worth a lot with regards to supplying summer peak electricity. However, the difference that allows a poor solar resource area like Ontario (it's not a desert) to do better than a place like California is in the pricing systems employed and in the strong emphasis on the manufacturing/job creation/wealth creation in Ontario's Feed-In Tariff versus the subsidy and tax avoidance based systems in the US, especially California and New Jersey. (see http://www.ases.org/index.php?option=com_myblog&show=Ontario-jumps-to-second-in-North-American-PV.html&Itemid=27).

While PV electricity is mostly about job creation and less about average electricity production (most PV electricity in Ontario will be made in May, June, July and August, with very little in the remaining months), wind electricity is where the bulk of the new renewable energy (expressed as (MW-hrs/yr)/(hrs/yr) = MW) will be made. It is mostly wind that will replace the electricity formerly made by Ontario's coal burners, or which will make up for the avoided natural gas consumption as a result of the cancellation of two gas to electric facilities that were proposed near Burlington. Their present 1656 MW worth of wind turbine installations (see http://www.canwea.ca/farms/wind-farms_e.php) include about 495 MW (30%) installed under the GEA pricing system/after October of 2009, and with another 3946 MW lined up and "in the queue" (see http://www.canwea.ca/farms/PDF/Pipeline-List.pdf). Combined, these should displace an average of 1600 MW of average delivered energy derived from polluting sources. In addition, several billion dollars worth of long distance transmission lines are also being built to tap a hydroelectric and several wind farms located near or north of Lake Superior. The new turbines will represent an investment of near $8 billion and support tens of thousands of jobs. If half of the jobs go to Canadian workers/companies, that is 64,000 job-years of direct employment over a four year period. There is an estimated 13,000 MW of wind turbine capacity also awaiting FIT contracts (longer term projects); the major excuse for the delay is in getting access to transmission lines to the Toronto metro region.

With the survival of the GEA, more wind power can now be developed in Ontario, and at a pretty significant rate, especially compared to NY State, which has very similar wind energy resources compared to the inhabited portions of Ontario. To date, most turbines have been installed in southwestern Ontario, near the Lake Erie and Lake Huron shorelines (these are where the best onshore winds that are near the major population centers are located between Windsor to Kingston happen to be, with the major electricity demand especially centered on the Toronto-Burlington-Hamilton region). The existing transmission lines in the province are mostly monopolized by nuclear facilities (3 complexes, 20 reactors in total) and the coal burners (those lines will soon be freed up), though the new $2.3 billion line from the Lake Superior region will allow wind power from that region to be shipped to southern Ontario/Toronto.

Wind turbines are not easily hidden, though on the plus side, they also produce electricity at reasonably affordable prices. PV systems, especially rooftop or small 10 x 10 meter units located in back yards and farms do not have a large "visual presence", but their electricity sells for 78 c/kw-hr, which is between 10 to 20 times present "market rates" and about 6 times more than large wind turbines. The PC party tried to use wind turbines as well as the price of PV electricity as a major campaign issue, but that appears to have failed, even though their tactics were well received in the farming/suburban zones that they carried. There was also a huge contingent of "anti-turbinites", well financed and well coordinated with similar organizations in the U.S. odds are, these Canadian groups also got backing from the oil, natural gas, nuclear and coal based industries and owners. And unfortunately for them, but fortunately for the vast majority of people, time is not on the polluter's side.

For the time being, corn production (very big in southern Ontario) is actually profitable due to high corn prices that are cause by ethanol prices that are set by the world petroleum prices. Most farmers can be ambivalent about wind turbine income under those conditions. However, wind turbines can supplement a farmers income to a significant degree, because lease payments are a direct profit, and do not significantly affect their crop yields (at 180 bushels/acre, the 1/8th of an acre covered by roads and the turbine and would be about 23 bushels, worth roughly $161/yr (lease payments are between $5,000 to $10,000/yr). Similarly, local property tax revenues will also be at least those levels. Each 1000 turbines installed across Ontario is also a transfer of $20 to $25 million/yr from urban to rural areas. If corn prices or corn yields slide for some reason, wind turbines will be quite welcomed by farmers. In 5 years (the time for the next election), these transfer payments of $100 million/yr in return for electricity to urban zones will become a major economic factor in rural Ontario politics. The removal of the Green Energy Act would be a direct threat to such activities and to such steady income that so many will appreciate.

Similarly, as employment in renewable energy manufacturing, and especially wind turbine manufacturing keeps expanding, this will also start to develop a constituency of its own - voters (workers, and those who employment depends on those workers/businesses) and businesses, as well as major banks that are financing these developments. This snowballing effect is called a "virtuous economic circle", where the social and political feedback mechanisms lead to even more renewable energy development. In 5 years, with hundreds of thousands of people who know someone working in the renewables business and close to 50,000 people actually directly employed, the pro-renewable voting block will be significantly stronger. After all, it was only 2/3rds of the Ontario voters this year who supported the GEA. The Liberal-NDP coalition needed to run the Ontario government will actually force the ruling party to adopt more progressive positions, such as no more expansion of the dreadfully expensive Ontario nuke business (it is responsible for most of Ontario's existing debt). And that is a good thing...

2011 was an extremely bad year for any politician to run for office, since the rotten economy that was unleashed by George Bu$h and Company via the sub-prime fiasco/mortgage based bond frauds/assessment frauds has left a lot of people ready to vote out anyone in office, assuming they even bother to vote (historically low election participation this time). The fact that the Green Energy Act has a constituency of three of Ontario's four major parties (Libs, NDP, Greens) and a strong majority of the voters seems pretty impressive, though you would never know it based on the grumpy corporate owned media in Canada (similar to the U.S. right wing, corporate philosophy/belief system).

And for NY businesses looking for growth anywhere, you can at least look to Ontario (and to a lesser extent, Quebec). After 2012, wind turbine installations will effectively cease and desist with the end of the US tax avoidance based incentives. But, the renewables gold rush will still keep on kicking strong in Ontario, thanks to the FIT requirements of guaranteed primary access to the grid and a fixed price based on the cost of production plus a reasonable, socially determined average profit rate for the investors.

Too bad NY's state government won't take the hint, and get FIT, at least in the near future.

Also of note, see http://www.cleanbreak.ca/2011/10/07/liberals-re-elected-in-ontario-green-energy-act-and-feed-in-tariff-program-live-on/ and http://www.reuters.com/article/2011/10/07/us-ontario-energy-idUSTRE79651420111007.

DB

Offshore Wind, Revisted in 2011

2011-09-29T13:16:00.004-04:00

The Ormonde wind farm, England - 30 x 5 MW RE Power wind turbines = 150 MW, newly up and running
from http://www.rechargenews.com/multimedia/archive/00034/webvattenfalloffshor_34400b.jpg

Introduction
The very recent NYPA decision to snatch a defeat from the jaws of victory - in other words, demonstrate another profile in cowardice with respect to putting real money up instead of empty rhetoric with respect to doing something about Global Climate Change, real economic development and regional manufacturing revitalization - was tragic, no doubt about it. However, that seems to be the Standard Operating Procedure from the People's Power Company of New York State, and many would suffer from heart palpitations and chest pains at the shock of seeing different behaviors exhibited from NYPA. After all, NYPA is sitting on a humongous, non-depleting gold mine at Niagara Falls - both economic and political power are spin-offs - so why change? Besides, how would certain Republican NY State Senators collect campaign contributions from frackers and financially related entities if a primary motivation to use of fracked sourced methane - electricity generation - was made obsolete by generating around 200 MW (delivered basis) of non-polluting electricity from 500 MW of installed capacity? Inquiring minds might want to know such things...

Discussion
Offshore wind on the Great Lakes is a great potential source of non-polluting electricity. From an old estimate based on rather primitive 2004 era technology and a 40 meter depth limit, up to 250 GW (about 14 times NY State average usage or 16 times what we actually generate), of average electrical production could be extracted from the winds blowing across shallow Great Lakes waters - see "A Great Potential" at this site: http://www.4shared.com/document/1LzGtIFB/AGreatPotential.html. However, that 40 meter depth limit no longer applies - using approaches such as jack-up foundations and floating foundations, essentially all of the Great Lakes can be tapped - for example, the second deep-water commercial scale trial was recently assembled in Portugal (the first was the Hywind project in Norway) - see here for new 2 MW trial Portuguese assembly video: http://www.vestas.com/en/media/news/news-display.aspx?action=3&NewsID=2829. And the three things (other than a will to do it) stopping this are a power purchase agreement and perhaps some additional transmission capability and electrical energy storage facilities (pumped hydro).

And since far more capacity to make electricity exists than there is a market for it in the near shore load centers (all of Michigan, Chicago, Cleveland, Toronto, Buffalo, etc), obviously, not all of the Great Lakes needs to have its 10 to 20 MW per square mile wind turbine covering. In general, the 44 million people near the lakes use an average of 75 GW, and almost all of that is pollution sourced at present (coal, nukes, Ngas), though it certainly does not need to be. And don't forget about the tremendous onshore potential of the Great Lakes states, which also works better when the offshore regions are also tapped - see the 2010 US Wind Map at http://www.windpoweringamerica.gov/wind_maps.asp.

The offshore wind business is a fast growing segment, with huge capital requirements to set up the installation infrastructure (lots of various sized boats, barges, jack-up rigs, cable-laying boats, factories to manufacture high capacity underwater transmission cable, offshore transformer substations, foundations for these, dockyards to manufacture of these, etc, etc, etc). Translated, that is also huge job creating potential - it's the money spent that makes the jobs, after all, as this is not a charity arrangement. The going rate is about $4.5 million per MW of capacity, though economies of scale should drop that a bit. About 75% of the total costs will be things other than the actual turbine, so even manufacture of the turbine is not the major expense/major job-creating part of this system. And let's not forget the banking and financing aspect - many of the deals announced in Europe are in excess of $US 1 billion per wind farm. The expected growth rate of 60% per year through 2017 is also quite impressive, and if it comes to pass, with 70 GW installed (around 4 GW now), that will represent a real investment of $US 315 billion (see http://www.offshorewind.biz/2011/09/28/danotek-presents-7mw-pm-generator-usa/). The driver for this is northern Europe, especially Germany (who announced they are dumping nukes as an electricity source in response to the Fukushima FUBAR - and impending approximately 1 million dead people in Japan due to the radiation spawned cancers tragedy) and Great Britain (who recently ran out of natural gas from the North Sea fields, and faces an increasingly expensive import tab).

But hey, we're NY State, we don't need no stinkin' manufacturing jobs, especially in Western New York.... So, move along now, never mind..

One spot to get an idea on how fast the offshore wind biz is progressing can be seen at this website - http://www.thewindpower.net/windfarms_offshore_en.php. So far, the installed capacity is 3587 MW in 56 wind farms and from 1297 turbines. Since an average net output for these would be around 40%, this is around 1400 MW on a delivered basis. The oldest wind farm (and still operating) was installed at Vindeby in Denmark (1991), consisting of 11 x 450 kw units. The present average size is near 2.77 MW.

At the present time, 5189 MW is under construction in 14 arrays (plus a one unit demonstration site) using 1351 turbines, or an average 3.84 MW per turbine. One of these arrays - the Ormonde array in England - is quite typical of the "new breed" - is undergoing commissioning, and is made up of 30 x 5 MW units. Most wind farms from now one that are offshore will be in the 5 to 7 MW range. This new construction capacity represents an investment of around $US 23 billion. The largest of these is the London Array, consisting of 278 x 3.6 MW Siemens turbines.

But all of this pales in comparison to the "planned" facilities. There are now so many of these that just the ones whose name starts in the A to F category added up to 86,827 MW in 166 wind farms. Based on the phone book and dictionary, the whole alphabet's worth would 291.3 GW in 567 wind farms, averaging in at 523 MW per offshore wind farm, or about 105 x 5 MW turbines per array. This is an investment of around $US 1.3 trillion. Too bad NY State decided to say "I'll pass" on this one (it takes around 5 to 6 years before one of these comes to fruition, and most of that time is hustling up the money, as well as the wind speed and wave height studies as well as bathymetric/soil strength documentation).

Not all of these proposed wind farms will get built (NY had 12 GLOW projects listed, all essentially deceased now). Those NY wannabes totaled up to 6500 MW, or roughly an investment of $29 billion, and this would have been enough of a market to justify a local large scale wind turbine manufacturing facility AND more importantly, supply chain. Even at a paltry 35% net output (Lake Erie and Lake Ontario winds are decent, but not as energetic as those in the North Sea), that's 2,275 MW of continuous generation, or enough to eliminate a big part of the Ngas sourced electricity in NY State (or most of the output from the 4 nukes located between Rochester and Watertown).

However, let's say that you are a nefarious business person in the business of selling natural gas in NY State. That 6500 MW of offshore wind would not make you happy. A similar quantity of onshore wind would hopefully make you even less happy. All of those dreams of erecting fracking wells across a lot of the southern border of NY State would get ... deflated. So your dreams of big bucks from the sales of mass quantities of mined methane (natural gas) would go "up in smoke", to quote some really funny and really famous recent ... philosopher/comic/actors. Hopefully you won't take your anger out on "the little people", including children and pets should the common good prevail and your greed fail...

Of course, at present, with electricity prices paid to generators going for less than 4 c/kw-hr in WNY, offshore at a range of 12 to 20 c/kw-hr seems tough to justify. But those cheap rates only exists that cheaply due to massive governmental subsidies. For example, the value of the Price-Anderson Act, which allows nuke sourced electricity to even exist as a commercial possibility has been estimated at between 20 c/kw-hr to $3.20/kw-hr. Even these conservative studies ($100 billion disaster cost, which is understated by a factor of at least 10, and the real probabilities used are far too low) give 3.58 c/kw-hr (2000) - see http://www.genevaassociation.org/PDF/Geneva_papers_on_Risk_and_Insurance/GA2000_GP25(2)_Heyes&Liston-Heyes.pdf and http://blog.sustainablog.org/2005/11/findings-on-us-nuclear-subsidies/. (See also http://thinkprogress.org/romm/2008/08/07/202962/how-much-of-a-subsidy-is-the-price-anderson-nuclear-industry-indemnity-act , http://www.dblinvestors.com/documents/DBL_energy_subsidies_paper.pdf as well as http://www.nuclearpowerdaily.com/reports/After_50_Years_Nuclear_Power_Is_Still_Not_Viable_Without_Subsidies_999.html - it's a difficult subject. Bottom line - nukes are not even possible without the Price-Anderson Act subsidy, and as Fukushima has shown, stuff happens. The coal units that can chug out electricity at 3 c/kw-hr get to avoid the cost of their particulate pollution and CO2 pollution valued at near 9.5 c/kw-hr, in addition get to benefit from 0.5 c/kw-hr worth of subsidies for coal mining. As for Ngas, just what is the real long term price - is it the $15/MBtu of 3.3 years ago, or the $3/MBtu of 2 years ago? According to Credit Suisse, $10/MBtu is what is required to justify the investments needed to keep the Ngas flowing at today's rates, and it is going up at a rate of near $1/MBtu per year.

Obviously, for such a capital intensive industry (wind turbines), those with access to the least expensive capital (longest term, lowest interest rate money, in the billions) would be able to assemble the lowest cost wind farm, on or offshore, but especially for offshore. And who has the best credit rating in NY, even better than NY State's government? NYPA, that's who. They recently offered bonds for 10 year terms at 3.25%, and 20 year ones could now be offered at near 4%. If a wind farm installed using 11.5%/20 year costing money would come in at 20 c/kw-hr, NYPA rates would allow that same wind farm to come in at 14 c/kw-hr. Add in the REPI benefit which NYPA would quality for (a 2.1 c/kw-hr for 10 years rebate from the Federal Government), and that's 13 c/kw-hr electricity for 20 years, and in pretty massive quantities, enough to seriously suppress the demand for natural gas by avoiding the need to burn gas to make electricity.

Sounds good, right? But no dice.

Developing such projects has often been described as a "Chicken or Egg" process - as in which comes first, the demand for the product (electricity from offshore wind) or the supply of it. Any question of which one the NYPA rulers are should now be firmly laid to rest - it's the Chicken.

BTW, supposedly NYPA has bought all of 70 MW of onshore wind (from the Maple Ridge Farm) via a PPA in the last 7 years. That is quite paltry compared to what they need to do, or to make up for all the nasty they did by buying and installing 2 nukes in NY State (Fitzpatrick and Indian Point 3). They need to up that to at least 7000 MW of NY wind power, ASAP, and not by 20 years from now.

Anyway, that is a political decision, despite claims to the contrary. Perhaps it is time to get politicking with regards to the People's Power Company of NY (NYPA), which seems to be rather completely captured by those representing the polluting side of things.. Of course, the same could probably be said about our nominally "Democratic" Governor....

DB

Variations on Merit Order Effect - Alice in Wonderland, Again

2011-09-15T17:37:00.011-04:00

What lies beyond that door?

http://www.starpulse.com/Movies/Alice_in_Wonderland/gallery/ALICEWONDERMV011/

Introduction
This may seem strange (hence the Alice reference, and the "curiouser and curiouser" aspect), but adding more no-fuel-needed renewable electricity into a system that NY State has LOWERS the spot market price for electricity, despite the high capital costs of such projects relative to using ancient, paid off facilities. On the other hand, adding more fuel-needed pollution sourced (makes CO2 and other air pollution) electricity into the grid RAISES prices for all electricity sold for that time period in which prices are determined (generally one hour intervals) up to the "marginal price" (the most expensive bid in the set of bids needed to supply the hourly demand, determined from lowest to highest price). After all, even hydropower output is difficult to predict on a long term basis, as droughts can really ruin such predictions, and Global Climate Change is not making matters easier, either. And fossil fuel prices - especially natural gas prices - are notoriously unpredictable since 2000, when "conventional" North American gas depletion became noticeable, and continuing production at essentially constant rates required increasing amounts of more expensive "unconventional" gas. Like coal bed methane, and fracking tight sands in the Rockies and tight shales in the Appalachians, for example.

Discussion
Renewable electricity, and especially wind based electricity, needs to get sold whenever it is made. The amount made each year can be accurately predicted from studies of previous historical wind data at a given site, though predictive wind maps are also pretty good at coming up with the correct answer, too. However, predicting the wind speed for each hour of a given day more than a week in advance is really not practical, and for two weeks in advance, just not mathematically possible. You may as well try and accurately predict when the next nuclear reactor meltdown for any reason will happen - which is also mathematically impossible. But, financing for wind turbine projects IS practical because all that really matters is how much electricity gets made in a year, not necessarily exactly when it is made at any given site.

Because of the need to sell electricity whenever it is made, wind turbine owners that operate in "competitive" markets like NY State have to set their hourly bids in such markets below the price of any other bids. On the other hand, that would be foolish in the extreme for power generation owners where fuel cost is THE MAJOR EXPENSE, and this especially applies to natural gas sourced facilities. After all, why spend more to make electricity than it costs to buy the fuel to generate the electricity? Logic says that fuel should only be consumed when more money will come from sale of that electricity than it costs to buy the fuel to make that electricity. Thus, fuel cost is the majority of their "marginal price".

In other words, the prices of the bids to supply electricity for each hour do not necessarily reflect the costs to make electricity for that hour. Yes, Alice, we have arrived in Wonderland. Another wonder is why a "market" like NYISO Zone A (Western NY) would even be considered "competitive" - coal is still less than 50% of the fuel cost of delivered bulk natural gas (Ngas) - today's price would be the Henry Hub gas price ($3.98/MBtu - see http://www.oilnergy.com/1gnymex.htm) plus about $1.30/MBtu (for pipeline transport), or roughly $5.30/MBtu. Coal prices are estimated by the U.S. Energy Information Agency to be $2.37/MBtu - see http://205.254.135.24/steo/ - 45% of that of Ngas. And that Ngas price is less than half of the price needed to financially justify new gas wells, and especially "unconventional" (including fracking sourced) gas. And 3 sites - Dunkirk, Huntely (NRG) and Somerset (AES) can supply almost all of the average electricity load which averaged 1762 MW in 2010, and especially ALL of the non-NYPA load. NYPA supplies about 400 MW to local customers (per the Federal Power Act), so the non-NYPA Zone A load would be around 1400 MW. However, wind supplied 85 MW, landfill gas supplied about 25 MW, trash burning supplied another 25 MW and NYPA's pumped hydro unit supplied 57 MW, so Ngas is, on average, not needed.

After all, the conventional definition of "competitive" is that any one supplier cannot affect the price of that product (by adding more supply/withdrawing supply/raising or lowering the price above or below the "equilibrium price"). That simply is not true for WNY electricity. This is neither monopoly nor competitive - it is "oligopy", with its own sets of rules. And in this netherworld of bent reality, Ngas sets the marginal price when demand is above average/generally "peak", and coal sets the marginal price when demand is lower than average/generally "non-peak". Renewables, and especially wind sourced electricity, is bid in below the price that coal is bid in, so that if wind derived electricity is made, it gets sold at some price (and ANY price), a price that is only known after the fact. And this is why spot market prices for electricity drop as more wind sourced electricity is added into a grid, and why prices rise as more natural gas is added in. However, using more Ngas to make electricity raises the demand for Ngas, which in turn raises the price for Ngas, so more Ngas used to make electricity also means higher home heating prices for the vast majority of us WNY'ers who use Ngas for home heat and hot water, as well as for employers and governments (schools, especially) who use it for heat.

So, if you want lower spot market prices for electricity (and the price of most electricity in sold WNY is determined in this manner), then you want to add more wind to the system. If you want to see high heating costs AND higher electricity prices, then use more Ngas to make electricity. It is THAT simple.

Electricity grid pricing systems based on the "competitive" and "marginal pricing auctions" are in effect for about half of the states in our country, and they exist throughout the world. They sort of make sense when fuels are used to make large percentages of the electricity (mostly coal, Ngas), and when the prices of those fuels tend to fluctuate significantly over time. They make no sense for renewable energy, or when long term contracts are used to obtain the bulk of a system's electricity. For example, exports of coal from the U.S. East Coast (mostly West Virginia) this year will be near 150 million tons, or 15% of total coal mined, and this pulls coal price up (now near $75 to $80/ton - http://205.254.135.24/coal/news_markets/ and http://205.254.135.24/coal/nymex/html/nymex_historical.html). But, when renewables and fossil fuels interact in such systems, the Merit Order Effect shows up, and as more renewables get added in/displace Ngas and eventually coal (which also has fluctuating prices), spot (also know as "pool") prices drop.

Tales from South Australia
Australia is a country with a lot of coal in 3 of it's 7 states (New South Wales, Queensland, Victoria) - a LOT of coal. It is a major exporter to China, India and Japan. Despite an awesome wind resource with a relatively small population over a land mass the size of the US or Canada, coal still rules as the main way to make electricity, with Ngas also in the mix. But, as wind sourced electricity gets added, prices for electricity keep dropping, first forcing Ngas out of the market, followed by coal. Australia, like the U.S., could easily supply all its electricity with wind and have plenty of capacity left over.

Anyway, here is the trend ( from http://www.cleanenergycouncil.org.au/cec/resourcecentre/reports.html - Transmission and Congestion report (.pdf download)):

The graph may be a bit obtuse, but it has great significance for NY State. It is from a report on South Australia's electricity system as that state starts to displace large amounts of gas fired electricity with wind, and what happens to electricity prices when that occurs. The report also concerns efforts to use "CO2 credits" as a way to mitigate CO2 pollution; Australia has way too much cheap coal usage, as well as a big attempt to use a recently discovered offshore natural gas field located between East Timor and Western Australia (Indian Ocean) to make electricity. The report can be downloaded here:

http://www.cleanenergycouncil.org.au/dms/cec/reports/Clean-Energy-Council-report-on-network-congestion/Clean%20Energy%20Council%20report%20on%20network%20congestion.pdf

The graph shows that as more wind is added to the system, electricity prices drop. They also have one of these "marginal price systems", such as the NYISO is, which sets spot market prices based on hourly bids and whatever the last most expensive bid is in order to satisfy the hourly demand (marginal price). Most of the electricity for eastern Australia is provided by burning coal in paid off (as in, generally zero capital cost) plants, despite the enormous wind resource (they also have a humongous solar resource, but, given the wind speeds, solar thermal and solar PV is more expensive, by at least a factor of 3 (the interior often has 300 to 350 days of full sun per year; in WNY, we have less than 180 full-sun-equivalent days/year)). And besides, with less than 8% of the population of the US, going renewable should be a piece of cake, except for those super-cheap coal supplies...

You can take the graph and get a similar result with the profit rates (and also profits) obtained by coal burners making electricity. Replacing gas with wind takes a bite out of coal profits, and coal to electricity profits, as well as profits of companies who own old nukes. The added benefit is less Ngas usage, less demand for Ngas, and lower prices for remaining customers of Ngas, particularly industrial and residential users. This has the added feature of leaving customers with greater disposable income, and making their manufacturing industry more competitive, leading to better economic outcomes.

On the other hand, if you twist this situation and start replacing some coal with MORE natural gas fired generation (or wind turbines with Ngas, or any increase in electricity usage with Ngas instead of wind), coal burner profits will actually RISE, because they can charge more for for the electricity that they do make. And the increased demand for Ngas will raise the price of Ngas, which in turn will raise the profit rate for those burning coal to make electricity! Wow, what a feedback situation. Of course, lowering the demand for coal slightly will drop coal prices, and lower coal prices PLUS higher prices for the electricity profit gives even greater profits. So why on earth would the owners of coal burners object to that? Plus, those supposedly infinite reserves of Ngas aren't infinite; in fact, they are quite finite, and quite temporary. And never underestimate the ability of a steady growth rate in consumption of a finite resource to burn through that resource at a rapid rate - that is the basis for the math behind Peak Oil, after all (the Logistic Equation - see http://en.wikipedia.org/wiki/Logistic_function and http://en.wikipedia.org/wiki/Hubbert_curve), and the reason oil prices are near $90/bbl, and not the $25 to $40/bbl that many "conventional" energy experts predicted, even as late as 2007.

The moral to the story is that if you want to replace the use of coal to make electricity in NY, DO NOT USE natural gas, as that will just amp up the profit rates to amazing level of the "baseload polluters" - nukes and coal. And just for good measure, two other bad things happen. Firstly, consumers/ratepayers (most of whom are poor to middle class) get screwed royally when the average cost to make electricity becomes vastly disconnected from the average price of electricity, since price gets set by the marginal bid, not the weighted average of bids for any given hour. And next, the profit rates for pollution based generators, which determine the motivation to continue their operation, remain high, and as natural gas prices increase over time (inevitable, given resource depletion and the gas industry's best wish of increasing gas consumption rates), so do the profit rates for "baseload polluters" increase. And in NY State, the Ngas can only be supplied by a frack attack. So if you want to put a big crimp in the frack attack, work to cut DOWN on Ngas usage NOW, not sometime in the distant future.

The best solution is to not go the Ngas diversion, and go directly to wind turbines and increased efficiency to deal with electricity supply and demand. Finally, the huge volume of fugitive CH4 from fracking renders the Greenhouse Gas argument (use Ngas instead of coal/less greenhouse gas warming from the lower CO2 emissions per unit energy delivered than from coal) pretty much irrelevant. As for air pollution - it's particulates and heavy metal poisoning from coal, or ground level ozone (photo-oxidation of that methane) and radon from the fracking. And then it becomes a fine example of a "Morton's Fork" dilemma - see http://en.wikipedia.org/wiki/Morton%27s_fork - that is, a choice between two equally bad options. In reality, this is actually a false choice.

BTW, whenever the phrase "natural gas" pops up, does the pre-programmed word "clean" pop into your head? If so, work on it, as, with practice, it will go away.

DB

On the Strategy of Replacing Coal with Natural Gas - Try Wind Instead

2011-08-28T16:47:00.010-04:00

Introduction
A lot of environmentalists and their organizations as well as "leading" think tanks/thinkers and the like have pursued a strategy of "bridging" the transition from coal based electricity to renewable based electricity with natural gas (Ngas) based electricity. Some even bought the line about nukes being less environmentally nasty than coal, and this triage mentality thus made room for nukes, or at least resulted in lessened opposition to them. It's a "do a bit less harm but not a lot less harm" concept, and even Jim Hansen bought into it with nukes, at least pre-Fukushima. Unfortunately for many of us, reality has dealt that "do less harm" a nasty punch in the proverbial hurting zone, at least in NY State, especially when coupled to the con-job of the decade (but hey, the decade is still young...), which is tight shale gas from the Marcellus/Utica formations.

And as it turns out, natural gas (Ngas) is now essential.... to the above average profitability of old coal and nuke sourced electricity. Without at least some Ngas in the mix, or with increasing amounts of wind power in the grid mix, prices for coal and nuke based generators stay low, and profitability is merely average or less, which is a heretical concept in corporate circles. Adding in more Ngas usage into NY State's electricity mix increases the price of electricity and especially the profitability of those other pollution sourced electricity producers. More Ngas consumption depletes reserves of Ngas faster, keeps Ngas prices higher, and also increases the prices residential and commercial users of Ngas for heat have to pay for their heating fuel. Plus, once Ngas using generators have been built (especially gas turbines, which cannot use coal or solid biofuels), owners want to keep them operating, especially in profit-making modes, and the coal and nuke based generators MOST CERTAINLY WANT THEM TO STAY OPERATING, if only for a small amount of time.

Maybe it's time to quit kidding around. If eliminating the pollution by-products from electricity is actually the goal, it is time to end the Ngas "bridge" charade, and go for the (mostly) wind-tidal-pumped hydro route in NY State. Besides, due to the high percentage of "fugitive" methane that escapes during the fracking process, there is effectively little to no benefit to using fracking sourced Ngas to make electricity versus coal (close to the same greenhouse gas global warming results, especially in the initial 20 years) with respect to greenhouse gas/climate warming potential. The only way to minimize pollution in NY associated with electricity production (rad waste generation, the occasional (but far too often) Fukushima-like radioisotope belches, CO2 pollution, particulates, CH4 pollution, etc) is to generate electricity via renewables, and as required, use pumped hydro (mostly) as a temporary electric energy storage route. Odds are, that also means changing the pricing system we have for renewables in NY State, but if a basket case (of conventional electricity policy "wisdom") like Japan can change (they introduced a Feed-In Tariff (FIT) system on August 26, 2011), maybe there is hope for NY State, too....

Discussion
In marginal pricing based electricity systems such as NY State has (also referred to as Locational Based Marginal Pricing, or LBMP), the highest priced generation of the total variously priced "blocks" of electricity needed to satisfy an hourly demand sets the price for all electricity for that hour. For example, even if 95% of the electricity for that hour is priced at 3 c/kw-hr and 5% is priced at 10 c/kw-hr, all electricity is priced at 10 c/kw-hr for that hour. However, if demand was completely covered by the lower cost electricity (in this case, 3c/kw-hr), the price would be 3 c/kw-hr for that hour. The highest priced generation comes from oil, followed by Ngas, wood, trash, coal, nukes and finally hydroelectric sources. In general, very little fuel oil is used these days, as it is much more expensive than Ngas (it helps to use common thermal units, such as dollar per million British Thermal Units, or $/MBtu); in 2009, oil supplied less than 1% of NY State's electricity supply, which in turn was 50% of 2008's fuel oil usage value. These days, oil usage to make electricity is pretty rare, a victim of "demand destruction", due to it's high price relative to everything else. The next highest cost way to make electricity is to use natural gas in an inefficient manner (the more inefficient, the more costly, such as in back-up gen-sets that are about 25% efficient), and the least expensive way to use Ngas is to use it via co-generation, where both steam produced and electricity made can raise the thermal efficiency to nearly 85%. When the by-product steam cannot be sold/used, the most efficient way to make electricity from Ngas is via a combined cycle system (a system composed of a jet engine and exhaust heat recovery unit used to make steam for a steam turbine), which have efficiencies averaging 45% in the Con Ed region/perhaps 50% in colder regions.

In regions such as Western NY, the use of dedicated stand alone combined cycle systems powered by Ngas (NGCC) has largely become irrelevant; in 2010, less than 2.6% of regional electricity was supplied (46.1 MW out of 1762 MW) by Ngas, although some on-site generation was made but not sold into the grid (on-site generation). Thus, of the 566 MW of Ngas generating capacity, only 8.14% of that capacity, on average, was used. This small amount could have easily been displaced from any one of the three major coal burning facilities (Dunkirk, Huntley or Somerset), all of which operated in the 50% to 60% range, on average. However, if the Ngas facilities were shut down and their electricity was replaced by the coal burners, the result would have been LOWER wholesale electricity prices (Ngas is a more expensive way to make electricity, even when Ngas wholesale (hub) prices are quite low by historical standards, near $4/MBtu). With lower prices comes lower profits, and since these are for-profit companies extracting the Ngas from the ground, lower prices would not have allowed for that "Mr. Happy" feeling to be on display..... For WNY, even for those rare "peak times", Ngas usage could have been much less than was actually used, especially when supplemented by the 240 MW Niagara Falls pumped hydro facility (but more pumped hydro would be good to have...). However, by retiring many of the boilers at Huntley (4 of them at 86 MW each, total of 344 MW) and one at Dunkirk (86 MW), as well as by eliminating most co-generation possibilities (in 1998, Niagara Mohawk bought out 44 producers at a cost of nearly $3.4 billion), the probability that some Ngas sourced electricity would be needed on the NYISO spot market has been raised considerably. And this is great for the profits of the NRG (Dunkirk, Huntley) and AES (Somerset) Corporations. Furthermore, while there was a slight reduction is coal usage for WNY when Ngas was used to make 46MW, not much coal usage is avoided. In 2009, coal provided about 1066 MW of our regional (NYISO Zone A) electricity, or about 23 times as much as with Ngas based generators. The increase in particulate, acid gas and heavy metal poison pollution if that Ngas was replaced by coal, as well as CO2 pollution, would be pretty small....

However, that small usage of Ngas raised the price of electricity by close to 0.7 c/kw-hr (let's assume 0.74 c/kw-hr = $7.4/MW-hr). And while that may seem small, that cranked up the price to an average of 3.94 c/kw-hr from close to 3.2 c/kw-hr. That adds up to $114 MILLION last year ($7.4/MW-hr * 8760 hours * 1762 MW). But, at an average Ngas delivered price of around $6/MBtu and an efficiency of about 45%, a bid price of around 7 c/kw-hr (cost is about 6.1 c/kw-hr), the 46.1 MW of Ngas sourced electricity would have required the consumption of close to 3.06 million MBtu's of Ngas, at a purchase price of about $18.4 million. WNY electricity prices were about $114 million higher than they would have been without this "marginal pricing system", assuming that coal based electricity could have sold for 3.2 c/kw-hr at "minimal profit pricing". After all, in 2008, coal retailed for $57.81/ton with an average heat value of 11,248 Btu/lb; the "raw material price" would have been nearly $21.9/MW-hr (or about 2.2 c/kw-hr) for a plant that was 40% thermally efficient. The "cost" of that Ngas based electricity if it was priced at 7 c/kw-hr would have been $28.3 million. Note: all electricity producers also get additional revenue from the NYISO grid, such as "ICAP" and "UCAP", which is basically money paid annually for the ability to produce additional electricity on demand, or to just provide a known quantity over the course of a year. These fees can be considerable, and help offset low LBMP prices. An estimate of their value is around $62,500 per year per MW of generation capacity, although those these are also "bid" and subject to change. For the AES plant in Somerset, these could be worth about $40 million/yr, and for all of the coal burners in NYISO Zone A , this would have been nearly $111 million.

Maybe that's a lot of facts to digest, so let's recap. To make an average of 46.1 MW of electricity, about $18.4 million worth of Ngas had to be purchased at an average delivered price of around $6/MBtu. If this 46.1 MW was made for about 6 c/kw-hr and sold for around 7 c/kw-hr, that would have cost $28.3 million. And yet, electricity prices were yanked upwards by $114 million (from 3.2 c/kw-hr to 3.94 c/kw-hr) just to provide 2.6% of WNY's electricity. The coal burners got an estimated $7.4/MW-hr more for their electricity than would have otherwise been the case (last year the WNY average electricity price was 3.19 c/kw-hr). For them, that is an added $69 million in extra revenues for 2010. As the saying goes, "sweet"....

And now, along comes fracking, since conventional Ngas wells are getting tapped out in the US and Canada, despite the large increase in Ngas made as a by-product of oil production in the Gulf of Mexico (GOMEX). That oil tends to be loaded with methane; the Macondo well (BP blowout in 2010) was about 50 wt% methane. So called "unconventional gas" (tight shale, tight sandstone, coalbed methane, coal derived syngas to methane) is now providing around 50% of the methane used in this country, and that percentage is increasing - see http://www.theoildrum.com/files/Navigant%20NG%20Forecast.png. In some ways, this is a corollary to "Peak Oil", as over 45% more gas wells are needed (2009) to supply essentially the same quantity of Ngas as was made in 2000. This is a classic example of "running harder to stay in place", and an indication that it is time to get off of the treadmill...

Source = http://www.theoildrum.com/node/4436

There are a number of problems associated with fracking, not the least of which is the high cost needed to tap into the rapidly depleting (3 to 4 years maximum) amount of methane obtained from such wells, which translates into a required price now near $10/MBtu (but current Henry Hub spot prices are near $4/MBtu....). Then there is the degradation of infrastucture (notably rural roads), the need to deal with all that water pollution, the needed quantity of pipelines to constantly be added (since fracked wells rapidly deplete, more wells and more "feeder" piping needs to be installed) and associated water pollution/air pollution that goes with the fracking business. And then there is emanated/"escaped" methane... so much methane escapes in the fracking process (about 7% of the total extracted from a given well) that the net greenhouse gas effect for this methane (assuming it is used to make electricity in a combined cycle, non co-gen facility) is worse than burning coal to make electricity in s similar non co-gen facility for the initial 20 years. By year 21, about 75% of the escaped methane gets converted by sunlight and oxygen into CO2 and water, so the intense infared absorbance by methane is not so much a problem.

Since the demand for Ngas for heat is declining in the residential (greater efficiency, lower thermostat settings), commercial (poor economy, greater efficiency) and industrial (fewer factories, greater efficiency, poor economy) heating sectors, the only growth market for now is Ngas for electricity generation. However, Ngas is unlikely to ever be cheaper than coal as long as the coal is burned in an existing, largely or fully paid off facility, especially without significant CO2 pollution fees (upwards of $50/ton of CO2; RGGI "fees" are now less than $1.80/ton these days). And while a new nuke would never be able to compete with a new or existing Ngas facility, fully or mostly paid off nukes produce electricity very cheaply (especially due to enormous subsidies for nukes), so an Ngas sourced electricity producer will never be able to compete directly with an old nuke. However, in markets like NY, Ngas, coal and nukes can act together very synergisticly, maximizing profits for owners while "giving the business" to consumers. Unfortunately for Ngas producers, not too much Ngas is required to maximize coal and nuke sourced electricity generation profits.

In order to boost Ngas prices, the demand and consumption of Ngas has to increase by between 2.5% to 5% from 23.4 trillion cubic feet/yr (tcfy) to upwards of 24.5 tcfy or else the supply has to drop (as in less drilling until excess capacity is used up) by close to 1 tcfy. If such a "Standard Oil rationalization" approach occurs, Ngas prices could rise to near $10/MBtu, and once again "unconventional" Ngas would be profitable. Of course, when this happens, a big chunk of the American economy will take a major hit, as money formerly used for other things will instead be diverted to Ngas producers. Those with low cost (old conventional fields, GOMEX oil producers with significant by-product Ngas production) will obviously make a killing, since that extra price will directly translate into profit (money for nothing, so to speak). The net effect will be a newly imposed sales tax of $138 billion/yr, transferred from most of us to the owners of a tiny fraction of our economy. It will promptly induce a mini-recession, or slow down any existing economic growth, too.

Of course, if Ngas consumption in the electricity producing sector drops, prices for Ngas will stay low and perhaps even drop more, and the rush to do expensive Ngas extraction of "unconventional" gas will slow down significantly. One way to do this is to keep replacing the use of pollution based electricity (Ngas, coal, nukes) with wind based electricity. Usually when new wind capacity is added, the most expensive form of electricity production gets shut down when growth in electricity is essentially stagnant (as is the present situation). Almost invariably, this most expensive stuff is Ngas sourced electricity. Furthermore, even if prices for Ngas miraculously rise (at least to holders of Ngas reserves) to $10/MBtu, in much of the U.S. that will stimulate wind turbine installations. the $10/MBtu is one of those "threshold points" where wind becomes a less expensive way to make electricity, even if all Federal subsidies for wind energy were eliminated.

Of course, why stop at replacing Ngas, and continue on with replacing aging nukes and old coal burners with any combination of biomass, biogas, pumped hydro electrical energy storage, wind, tidal, geothermal and when conditions warrant, with solar. After all, that was the plan in the first place, wasn't it? But at present, the Ngas industry and especially the frackers are desperately trying to convince America not to switch from Ngas to renewables. They want to make that "Ngas bridge" between nukes, coal and other assorted polluting sources of electricity and renewables as long as possible by pushing it far into the future. Even if it trashes our economy and our climate, too.

It turns out that the concept of using the "Ngas bridge" seems to have been a strategic blunder by many well meaning people and well meaning groups. In NY, that blunder also increased Ngas prices for residential heating customers, as well as Ngas heating costs for their commercial and industrial employers, too. And it cranked up the profits that could be obtained from coal and nuke sourced electricity, making it LESS LIKELY that these facilities would be replaced with ANYTHING, let alone renewables. Oh well...

Conclusion
Anyway, more reasons to install a Feed-in Tariff system ASAP, as it would drop prices for electricity (Merit Order Effect) as long as the bulk of the renewable sources were low cost (i.e. not solar) and also drop prices for Ngas based heating, all without the need for subsidies from taxpayers (direct grants and/or tax avoidance opportunities for those who pay a lot of taxes. It also has the capability of stopping the fracking epidemic in its tracks by keeping Ngas prices low for the next several years by suppressing the consumption of Ngas.

Sound like a Plan? What are your thoughts?

DB

Some references:
http://www.eia.gov/cneaf/electricity/st_profiles/new_york.html for oil, gas, coal prices
http://www.eia.gov/dnav/ng/hist/na1170_nus_8a.htm for Ngas well numbers

A Keynesian FIT - A Cure for What Ails Us Nowadays

2011-08-19T14:19:00.011-04:00

Summary
At the present time, renewable energy generation investments that use Feed-In Tariff (FIT) pricing systems appear to be the best systems devised to promote employment in the manufacture of renewable energy systems as well as providing renewable energy at the lowest real cost. They require no tax subsidies/grants from governments, and they make renewable energy projects "bankable" at any scale - including ones that range from a few thousand dollars (residential rooftop photovoltaic) to offshore wind projects in Germany that cost in the neighborhood of $US 1.5 to $US 2 billion. These projects become bankable because the prices (based on electrical production cost plus a reasonable, socially determined return on the investment) are fixed for long terms (usually 20 years) and "economic curtailment" (cutting off grid access to the renewable energy provider when prices are deemed "too low" or even negative) is not allowed. As a result, the risk of project developers defaulting on their bank loans (up to 95% of the project) is very low, and this allows for low cost, long term loans, and the use of "less expensive equity" to be used.

When projects are financed by debt, and the sales of electricity over a long term are used to pay back these loans, that is economically stimulative. It is analogous to the government going into debt (issuing bonds) to finance socially useful investments, such as hydroelectric projects, road, bridges, sewer and water systems, rapid transit that does not use or and gasoline, etc. In fact, when NY State built the Niagara Falls power project in the 1956 to 1960 period (after the old one fell into the Niagara Gorge), this was a Keynesian stimulus. The bonds for this (NYPA bonds) were repaid via the sales of the electricity made - look, no taxes! However, getting repaid for water, sewer, schools, roads and other projects that make our lives better via taxes also fits the Keynesian bill.

In either case, money is created when businesses, individuals and governments go into debt to build things. This creates a demand for manufactured things (steel, concrete, etc), and that also creates a demand for labor and other things. This economic boost can get countries out of a deflationary death spiral, which happens when interest rates are near the zero point and yet businesses still won't borrow to make investments, because they don't perceive that there is the demand for their products or services needed to justify those investments. So people don't get hired, and those lucky enough to still be employed are busy saving money in case they too get unemployed (due to lack of demand), thus perpetuating this dreadful arrangement. The Keynesian Stimulus will get economies out of that horrible quicksand of insufficient demand. They work, whether private and/or public debt. The trick is not to do foolish investments, like betting on the price of tulips or dubious internet stocks, or even more foolish bets on which way stocks will go, or whether bonds based on fraud will get repaid.

So, if a massive renewable energy effort is initiated, and no government debt is incurred, this will start off an economic stimulus. And since these are real wealth creation efforts, ones which avoid consumption of fossil fuels that we either often import and/or subsidize via tax credits, deductions or via avoided external costs (somebody does pay those, just not the owners of those using or selling the fuels), this is not a wealth destroying operation, like the recent sub-prime fraud epidemic was. Look, economic stimulus and with no new taxes and it also makes energy without CO2 or particulate pollution or the possibility with a Chernobyl/Fukushima FUBAR, too! Cool....

Sign me up for some of this good stuff.....

Introduction
John Maynard Keynes was a famous British economist and intellectual who played a key role in the recovery from the Great Depression. A detailed history and discussion of him and his ideas can be found at http://en.wikipedia.org/wiki/John_Maynard_Keynes. One of his key insights concerned the ability of an economy to recover from a "demand shock" (a sudden lowering of economic demand) that often results when excessive financial market speculation (Ponzi schemes, frauds, bad bets, epic wide-scale theft by bankers of their customers deposits, etc) "bubbles" pop. The conventional (classical) theory (and soon that of Monetarists) was that an economy would rapidly come to the equilibrium of "maximum utility" without help from governments, but The Great Depression and the present "Great Recession" showed that concept to be false. Keynes showed why "sub-par" outcomes could result for very long periods (decades), and why government had to step in and raise demand to avoid a "deflationary death spiral". Much of his theory is based on a rejection of the "rational actor" construct, by entering/integrating insights from psychology and human behavior into economic theory. After all, economies are the construct of human beings.....

When Roosevelt became president in early 1993, the effects of 3 years of austerity as formulated by Andrew Mellon (a very wealthy banker and then US Treasury Secretary for Herbert Hoover) had proven to be a massive failure. Instead, Keynesian policies were tried, where the government became the purchaser and employer of last resort. Some initial policies, many carried out by Harry Hopkins, put millions of unemployed people to work building dams, roads, bridges, government buildings, schools, auditoriums, and doing public art (Federal Emergency Relief Administration = FERA, Civil Works Administration = CWA, Works Progress Administration = WPA), and thus avoided widespread starvation, death by freezing (no money, no heat) or associated diseases on cold, starving people. Usually, when things get that bad, violent uprisings occur, as people tend not to like to die from lack of food, water and heat, especially when some (the wealthy) are doing fabulous; Keynesian policies were thus an antidote to violent revolution and the associated violent repression (often paid for by wealthy people, or else enforced via armies and police) of such outbreaks of resentment by mass quantities of impoverished people. Soon, institutions known as Hoovervilles (encampments of homeless people living in tents) became much rarer. Giving millions of people jobs (and money in exchange for their labor) stimulated the demand for manufactured items (steel, concrete, housing, cars, for example), and these newly employed could actually afford to buy things, like food, housing, pay rent, buy cars, etc. It brought the economy from the steady and rapid declines of 1929 to 1932 to actually an expanding situation from 1933 to 1938 (austerity introduced in 1938 created a recession, though not a depression), which was eventually cured by WW2.

The Present Problem
Right now (August 2011), one of the major problems facing much of the world and especially the United States is the lack of Economic Demand, also called Aggregate Demand. This is exemplified by excessive unemployment, massive under-use of productive capacity (factories sitting idle), low prices for electricity and natural gas, and real wages and median incomes that are dropping with respect to inflation. Basically, producers of things are having a hard time selling what they are presently making, since customers no longer have the money to buy stuff at the rate they used to (US car sales are about 11 million in 201o, and were 17 million in 2017), and especially at the prices they used to buy them. The housing glut and the failure of housing prices to stop falling/rebound to former levels and result in additional sales is also emblematic of a collapse in demand, or a stagnant one verging into a collapsing one. And since customers are not buying, producers are not making, and they are not hiring people to make stuff or provide services. And since the bulk of Demand is made up of the purchases by those receiving wages, this is quite the circular firing squad.....

So what to do about this situation? One way to stimulate Demand is to lower interest rates, but for the US government, short term T-bills (3 month) now go for essentially 0.25%, and 10 year ones are now selling with less than 2% interest rates. In effect, we at at the "zero interest bound"; lower rates are only possible if the government PAYS people to store money (negative interest rates), which is an absurd arrangement, especially when we have a national debt of over $14 trillion, and paying people (and mostly rich people, too) to store money instead of using it to pay down the debt or for now, just to rack up less debt is ridiculous and morally obscene.

So, looks like the Monetarist solutions (adjusting the money supply by adjusting interest rates) are now inappropriate. Loaning people more money, even at really cheap long term interest rates, just won't work when those people have inadequate income to pay back those loans, and they have insufficient income due to the combination of the lack of jobs and higher cost of energy, notably petroleum. Additional factors, such as higher costs related to health care, college educations and many other items, as well as the increasing costs associated with a climate mutated to a hotter mode via the CO2 pollution that comes from burning fossil fuels does not help the situation, either. So fewer loans get taken out, and less stuff and services get purchased. And down the spiral we go....

The Keynesian FIT
At present, a manufactured distraction about "the US Debt Crisis" has nearly brought calamity onto the world financial markets, when conservatives and "teabaggers" threatened to have the US. default on its debts/obligations committed to in past times. This would have thrown millions, and possibly tens of millions of those employed in the US out of work, rapidly, when US debts were no longer considered safe, and by extension, just about all state, local and corporate debt, too. The price for passage of a $2 trillion debt extension was forced austerity, especially in coming years. More than 1 million people will either not become employed or be thrown into unemployment as a result of this ill-considered policy by Republicans and epic cowardice/excessive caution (take your pick) by the Obama administration. Furthermore, a poorer future economy (especially leading to the 2012 Presidential election) seems to be the intended purpose of this Republican congressional action. Of course, the poorly performing economy will collect fewer taxes as less people are employed, and this will actually ACCELERATE the rate of debt piling up. And more austerity will lead to the results presently being experienced in much of Europe - continuing impoverishment, economic decline and inability to pay off loans to foreign banks/creditors.

So, by not going into debt and using that borrowed money (especially at today's low interest rates) to employ people, the government deprives itself of future revenues, insuring greater future debts, as well as greater expenditures for food stamps, unemployment payments, medicaid, etc (assuming we wish to avoid Hoovervilles filled with desperate starving people). And the winners in the current economy - the upper 2% who have seen their incomes and wealth rise dramatically in recent times - can't find any money making investments that will employ people, due to insufficient and possibly declining demand. And they can't or won't ("they already have two of everything") spend their money fast enough for a "trickle down" effect to become meaningful. And one of their prime choices - loaning money out to poor and middle class people who will try to maintain current living standards not possible to sustain via constant or shrinking real wages - becomes a money loser when these borrowers can't pay back the loans. This sorrowful situation is described in a paper written by the International Monetary Fund employees, no less - see http://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf. The paper shows that as the income and wealth inequality in our country INCREASES, our economy becomes LESS STABLE, and more prone to "crashes", panics, recessions and then whopper recessions known as depressions. And the way to cure this is to produce more real wealth and distribute it to the lower and middle classes (as in create useful work and pay fair wages for this work), so that the lower and middle classes are not driven into "debt slavery" with no chance of paying it back. After all, when they don't pay back their loans because they have no income to do so, bad things happen, both to people (such as increased impoverishment, homelessness and alcoholism) and to economies, too. And this can percolate through the economy in many ways - such as when students can no longer pay back loans taken out for further education - overcoming this situation (very relevant for Buffalo, for example): http://www.nakedcapitalism.com/2011/08/bryce-covert-recession-has-lit-the-fuse-on-explosive-student-debt.html. And besides, money has an odd habit of "trickling up", not down, the income scale.

But, since increases in Federal debt to employ people is now FORBIDDEN by Republicans, what can be done?

Creating Money
Money actually gets created anytime someone or some entity (governments and/or businesses), takes out a loan. One way to do this is via "futures contracts", where someone pays a supplier now for an item (corn, oil, electricity, orange juice) that will be supplied at a set price at a future date. The creation of millions of Residential Mortgage Backed Securities (RMBS) in the 2002 to 2008 era was also a massive "money creation" effort that worked until the homeowners (those paying the money to the banks and trusts that owned the RMBS) could no longer afford their payments. Another money creation was the CDO's (Collateralized Debt Obligations) which more or less served as as insurance on RMBS's. When about 5% of the mortgagees could no longer make their RMBS payments, the entire system underwent a massive collapse. The payments could not be maintained because the combination of stagnant wages, higher oil prices, education and health care costs as well as the high cost of "adjustable rate mortgages" whose rate ballooned upwards after a few "teaser years" were greater that incomes from wages. Add in higher unemployment, and PRESTO - massive recession. Of note is the critical effect of the spike in energy prices from 2007 to 2008 (oil, coal AND natural gas, plus electricity) in this "Black Swan" type event.

Another way to create money and debt is with the electricity system. If companies take out loans to pay for improvements/repairs in transmission systems, and also for renewable energy electricity making systems (which require no fuel purchases, and is VERY important these days), and those loans and investments are paid for via sales of electricity for a 20 of more year time length, this also works to "create money" and well as to create wealth (the renewable energy generation and transmission equipment, which will probably last 25 to 50 years, and which avoids the purchase of fuels). As long as the risk of non-repayment of the loans/investment is small (which can be arranged for this industry), the cost of that money (interest rate, term of loan/investment) can be low, and thus the yearly repayments of the incurred debt can also be minimal due to the high likelihood of repayment. It would be as if the government were issuing bonds to produce and distribute electricity (which can also be done). Both have the same economy stimulating effect, and both can also make the world a better place as a result of these investments, especially if the electricity production is done with renewable (non-depleting) and non-polluting (no fossil fuels or nukes) approaches.

Renewable energy systems like wind turbines have very predictable future energy production rates. And since they use no fuel (methane, coal, oil, nuclear), fluctuating fuel prices have essentially no impact on the cost to produce this energy. There is also zero danger of nuclear mishaps with renewables; the downside of nukes can be seen in the recent Fukushima FUBAR, which is likely to result in close to a million cancer deaths, and several hundred billion US dollars in economic losses. There is also no waste disposal problem with wind turbines, and also no water usage to deal with/pay for. In other words, this can be a very safe and stable investment, provided the price is kept sensible and close to or actually constant. The trade off for this sensible pricing to the owners would be stable, sensible prices to consumers. The stable prices would mean no great discounts when gas prices collapse, but not great price spikes when gas prices surge, either.

And that's where Feed-In Tariff systems for renewable electricity pricing come in. Renewable energy investments become pretty safe (and for speculators, less desirable, because they only return average rates of returns that are associated with legal, less risky investments), because with predictable annual energy outputs, known prices and no "economic curtailments", a predictable flow of money to the renewable energy producer would result. And this means that bankers and investors can get repaid. Which is all they care about, or at least their primary concern. And since the capital repayments are between 75% to 90% of the cost of most renewable energy systems, this is an important way to get rid of a lot of extraneous extra cost for renewables. Such systems are proven as workable, and are responsible for the majority of renewable energy production and investment in the world, to date.

And on August 26, 2011, Japan passed feed-in law legislation, despite intense opposition from the nuclear industry. But, after 3 full scale meltdowns/core breaches, they don't have much say in this matter any more. Japan will attempt to not only replace all of their nukes eventually, but the several of them now idled (imported fuel oil and liquified natural gas are being used to replace the electricity either not made or not "conserved" by these shut down units, of which there are a lot more than the 6 at Fukushima). They are also going to try and prod their stagnant (but still quite prodigious) economy in this manner. It is a shame that so many people had to be poisoned (hundreds of thousands, if not millions have been "nuked" with fallout) before this more sensible route of Feed-In laws was passed.

Conclusion
Well, there you have it. If a region like Western New York wants lots of real wealth creating jobs that will boost up the middle class and employ mass quantities of unemployed people, this Keynesian FIT option can do it. And if most of this is focused on the lower cost renewables (wind, tidal, biogas, biomass), as these generation sources are incorporated, natural gas followed by coal and nuke based generation - notably the Indian Point "twins" now endangered by a 10 to 15 foot tall tidal surge coming up the Hudson River on a full moon care of Hurricane Irene (think tsunami at Fukushima) - can get replaced, and electricity will still remain affordable. And with our vast pumped hydro storage potential (also job creating, as we will need more than the Lewiston and Blenheim-Gilboa sites for this, but we have lots of hills co-located with water sources...) and inter-connection with other grids (Quebec, Ontario, New England, PJM, MISO), the short term variability of winds, tides and sunlight should be a surmountable problem.

Odds are, employed people who can afford the real cost of electricity is a better situation than unemployed people who can't afford subsidized pollution based electricity. Besides, a nasty dose of Cesium-137 will render much of NY's real estate wealth worthless, as will the rising ocean levels and "super-canes" spawned by Global Warming. And if you think we are going to install the required amounts of renewable energy capacity in the next decade without Feed-In Laws or the "Quebec Option" (or both), well, how would you like to buy a condo near Daiichi/Fukushima, Japan? Waterfront is now really cheap in that part of the country....

The Poor Standards of Standard & Poor's

2011-08-13T20:02:00.004-04:00

......... W. C. Fields, in "My Little Chickadee" - Some advice: Never bet against this Card Shark!
Source: http://cache2.allpostersimages.com/p/LRG/37/3706/1TCAF00Z/posters/my-little-chickadee-w-c-fields-1940.jpg

Introduction
As many of you might have heard, Standard & Poor's (S&P), a division of the McGraw-Hill Publishing Corporation (and whose CEO is also head of an organization called the Business Roundtable), which makes money rating bonds and other financial instruments, downgraded the U.S. Debt rating on Friday, August 5, "after hours". The downgrade dropped the U.S. bonds from the best and safest in the world (AAA) to the almost best in the world (AA+), at least in S&P's eyes. However, come Monday morning, investors rushed to buy U.S treasuries, raisng the price of bonds (and thus lowering the interest rate to be paid on them), and in effect, showing S&P's analysis to be "D " grade, which is as low as it goes on the bond rating scale (also called "junk status"). In theory, if the downgrade meant anything, prices on T-Bills should have fallen, and the interest rates on those bonds should have risen, but that did not happen. However, the stock market and the values of stocks and various indicies based on those stock took a net drop over the week (more on that, later). In other words, the "flight to quality" route was to go from investments in private companies (stock and corporate bonds) to U.S. government bonds. At present, 10 year long T-bills are going for less that 2.2%, and 3 month long ones are essentially at 0%. And there is a long line of buyers trying to get their hands on some of those. Well, in a period of horrible economic times when economic demand is close to non-existent and the potential for a "double dip recession" and a "deflationary death spiral" are unacceptably high, T-bills with puny interest rates are looking like the best thing available to put cash (as well as things that get sold for cash, like stocks, corporate bonds) into these days.

Well, in theory, that's capitalism "speaking" and the "voice of the market" in action. So who would pay for advice from those useless hustlers, con-artists and grifters at S&P that pass themselves off as analysts, anyway, unless you wanted to know what NOT to do? The other two big ratings agencies (Moody's and Fitch) kept the bond rating of the U.S. at AAA. And in making the downgrade, S&P was off by $2 trillion in THEIR estimate that the U.S. was going to be $4 trillion further in the hole by some future date. Oh well, this is the same firm that was rating "toxic" sub-prime residential mortgage backed securities (RBMS bonds) as "AAA" for much of the last decade, until that house of cards imploded (along with Moody's, Fitch and others). It turned out that S&P was being paid to lie about the stability and value of these RBMS bonds by the banks who were compiling these disasters in waiting and selling them off to suckers made "unsuspecting" by those wonderfully reassuring S&P "AAA" ratings. So, S&P has a problem with accuracy, credibility, ethics and honesty - no big deal, right, they all behave like that, right?

And besides, what has this got to do with the wind industry?

DISCUSSION
Actually, a lot. The wind industry is a very capital intensive business, where yearly revenues might only be 10% to 15% of the cost of the investment (not profit, just from the sale of the electricity made). Without access to low cost (low interest rate for long periods of time, like 20 years) money, most of the projects now being installed would never be installed unless the price of electricity went sky-high (which would allow high interest rates to be paid on short term loans because of the huge flow of money coming from expensive electricity sold to customers). And at present, higher electricity prices in the form of a price spike would lower the demand for electricity, lowering the price, and making sales and installations of wind turbines less likely. That same secnarion goes for ANY new electricity generation system, too - nukes, coal based, natural gas or biogas based, too.

So when the interest rates charged to private companies (like wind developers or utilities) goes up while electricity prices stay in the pits (as is the case nowadays), that trashes the wind biz. And old pollution based electricity generation units stay online for longer than they should, such as occurred at Fukushima. And look what THAT begat: Cesium 134 and 137 contamination as far as the eye can see, in Japan - http://www.dailykos.com/story/2011/08/12/1006409/-Nuking-Japanthe-Ugly-Truth. Yum.... There may well be more than the 1 million people dead that occurred from radiation poisoning unleashed by Chernobyl from Japan's most recent bad nuke experience, because Japan has no where to relocate the 3 million living in highly contaminated areas.. Relocation is about the only option when it comes to mass radionucleide poisoning on an epic scale when reactors go into "oops" mode.

There is a lot riding on those interest rates. For example, here is the fraction of the original loan principal that has to get paid every year on loans:

20 year, 0.0%/yr FCF = 0.05000
20 year, 2.5%/yr FCF = 0.06414
20 year, 5%/yr FCF = 0.08024
20 year, 7.5%/yr FCF = 0.09809
20 year, 10%/yr FCF = 0.11746

10 year, 0.0%/yr FCF = 0.10000
10 year, 2.5%/yr FCF = 0.11426
10 year, 5%/yr FCF = 0.12950
10 year, 7.5%/yr FCF = 0.14569
10 year, 10%/yr FCF = 0.16272

The equity payments (rates are usually higher for that than loan repayments) and loan repayments together are often more than 75% of the required selling price for electricity provided by wind turbines. Going from a 20 year 5% rate loan (essentially impossible to get by private industry these days, though still possible for states and municipalities, who can get such bonds at perhaps 4% rate for 20 years) to a 10%/10 year loan would require that the money obtained by sale of electricity and any subsidies be 1.75 times greater. Bummer.... prices would need to go up by at least 1.75 times for the increased cost of money (higher interest rates and shorter loan terms).

So what is S&P's angle anyway? Here are some thoughts:

Contained in a few of the comments (especially the initial ones by the blogstress Yves) are statements about S&P leaking their political decision to downgrade the U.S. to certain "hedgies" and banks on Tues, Weds and Thursday (downgrade occurred on Friday afternoon, after markets are closed). See http://www.nakedcapitalism.com/2011/08/did-standard-and-poors-break-sec-regulations-in-disclosing-its-downgrade-to-select-parties.htm l

So if these hedgies and select customers of S&P (especially some big banks) then went and shorted various stocks and stock compisite funds (i.e. bet that the markets and/or those stocks would take a giant dump), those shorting would make lots of money. And if they also bet against the implied message from S&P on the value of T-Bills (that is, they went long on T-bills, whose value tends to rise when stocks get dumped and when there is a mass flight to safe havens like T-Bills) more money gets raked in. Lastly, there is the bets on commodities category, especially gold.... Gold would also be exected to rise in value when stocks get dumped en masse...

Maybe this partly explains why S&P would not change their mind even after the $2 trillion math error (off by 50%, no biggie) was rapidly revealed on Friday afternoon. With no downgrade, those shorting and longing on this insider info could be screwed, royally, as what would have been a Sure Thing would actually now be a thing of Real Chance. That would violate the W.C. Fields "Chickadee" rule:

Upon seeing a couple of people (including Mr. Fields) paying poker, a young boy asked,
"Hey mister, is that a game of chance?"
And Mr. Fields replied, ever so truthfully,
"Son, not the way I play it."

So, having such insider info would be quite lucrative on the Big Casino playing field. Also, the CEO of McGraw-Hill (owner of S&P) is head of the Business Roundtable, which is where S&P gets a lot of its clients for the "advice" it gives, or the ratings they give to corporate bonds... So even if the directors of M-H and S&P don't directly benefit by doing the betting, shorting and "longing" themselves, their clients can and often do so, and M-H profits from a cut of that action, anyway. And anyway, it's still illegal, still worth a perp walk, providing the government decides to or bothers to investigate.

Of course, there are also other things at play, such as the "rentier" class wishing to impose austerity and further impoverishment on most of us, and profiting from and on this shift of wealth from the middle class to the uber echelons quite handsomely, too...

And that's where our Caveman President (as in, man, he sure does cave in a lot to Banksters) comes in, as well as those he appoints to police the Big Casinos (as there are a few of those gaming parlors these days).

More Golden Crumbs, as they are referred to in the Bonfire of the Vanities, for some really crummy types.....

Also, here is more information on some of this potential S&P nastiness:
http://news.firedoglake.com/2011/08/12/sec-investigating-sp-over-whether-they-leaked-news-about-downgrade-to-investors/

And the money quotes:

"The Securities and Exchange Commission has asked credit rating agency Standard & Poor’s to disclose who within its ranks knew of its decision to downgrade US debt before it was announced last week, as part of a preliminary look into potential insider trading, people familiar with the matter say."

" There is credible speculation that S&P’s downgrade crusade over the past several months is tied up in their lobbying efforts to keep federal regulators from changing the structure of the credit rating agencies. If they did leak selectively, it was done to make the impact of the downgrade larger and more painful for the US government."

DB

Marcellus Shalegas: The Swiss Cheesing of WNY - Part 2

2011-07-09T20:12:00.008-04:00

Update:

The recently announced plan of Governor Cuomo with respect to the big Frack Attack upon NY State did have one good aspect - it could actually be worse. But his plan goes downhill fast after that initial point is ascertained. While it initially spares the water supply of NY City and Syracuse from poisoning by hydrocarbons from leaky wells or from the drilling process/fracking fluids and "produced brine", for a large section of rural NY, it looks like open season has just been declared. And add to that a NYS DEC department that just got hammered with more budget cuts, and the fact that budget cuts to departments in NY State government for all seems to be Andrew Cuomo's vision of things to come in NY State. The odds of getting a sufficiently staffed DEC to police a drilling industry that often could care less about laws, rules and regulations does look awful slim, and probably lies in the range of slim to none. But, we could be like Texas, only without natural gas royalties... can things really get more bereft of intelligence than that? And even if that is possible, must we go there?

At present, natural gas prices are still in the dumps at near $4.30/MBtu - see http://www.oilnergy.com/1gnymex.htm. And as for the near term probable price for Ngas in the U.S. for the next few years, try this on for size: http://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html. Futures prices don't reach $6/MBtu until March of 2015, and don't hit $7/MBtu until December of 2019! Those prices indicate that Ngas is in abundance for the next 8 years. While futures prices are not a guarantee of the price in the future, they are what reasonably informed people in the business are will to be that the price will be, and someone has signed a contract with a purchaser of Ngas in the future for that price. And remember, fracking Ngas requires a price of close to $10/MBtu to justify the investments needed, like wells, pipelines, storage for radioactive Ngas (needs at least a 60 day "cool-down" to deal with natural Radon contamination) and gas treatment facilities (remove water, adjust methane content, remove "natural gas liquids" like ethane and propane). The fracking industry will supposedly have to make a treatment facility for the spent fracking fluids and "produced water" that cannot be put into municipal sewage treatment facilities. And if $4/MBtu to $6/MBtu is all that they will be getting for a price, and that price is less than the ALL-IN COST to produce it, well, somebody will be losing a lot of money. Tens of Billions of dollars could go "up in smoke", and in a hurry, too. But what the heck, it's another financial bubble - Party On, dudes!

Here is another not too well known fact. Wind turbines might be partly responsible for those sub-par Ngas prices right now, though if you are a consumer of Ngas, you probably don't mind this fact - in fact, you might be quite happy about that. Here is how that works:

The U.S. now has about 42 GW (42,000 MW) of installed wind turbine capacity, though for most of 2010 it was near 36 GW. According to the US Energy Information Agency and the average net output of these turbines was around 10.8 GW (94,647 GW-hr/yr) - see http://www.eia.gov/renewable/annual/preliminary/pdf/table3.pdf. Odds are, this wind sourced electricity displaced natural gas sourced electricity (in general, old nuclear and coal based generation is less expensive than Ngas based electricity, so the Ngas option gets discarded when the electricity demand is supplied by wind turbines). If the displaced Ngas generators had an average thermal efficiency of about 42.5% (some peaking units, some combined cycle units), the 94,647 GW-hr/yr of electricity needed would have required about 763 billion cubic feet/yr (bcfy) of Ngas. In 2010, about 22.6 trillion cubic feet (tcfy) were sold in the U.S. from 493,000 wells (and going up at about 3.7%/yr in number, too - see http://www.eia.gov/dnav/ng/hist/na1170_nus_8a.htm) and some imports (imports were about 10% of the total - mostly from Canada, and some as imported liquified natural gas (LNG)). Thus, wind turbine electricity production dropped Ngas production from what it would otherwise have been by 3.3%. In Texas, where more wind capacity is installed than in any other state (and all but 3 other countries), wind energy owners had to curtail production by 17% last year to prevent prices from getting too low (and possibly going negative, as happens in Europe on occasion), so more wind sourced electricity could have been made from already installed turbines....

With respect to price, Ngas is termed a price inelastic commodity. That is, subtle changes in the supply/demand balance can have drastic effects upon the price. For example, in 2009, demand for Ngas dropped by 3% from 2008 following the appearance of the Grim Reaper-like occurrence that is the Great Recession, and the price dropped by over 50% - see http://www.eia.gov/dnav/ng/ng_sum_lsum_dcu_nus_a.htm. In this table, note the drastic difference in the value of the Ngas sold in 2008 and 2009, a difference of nearly $89 billion: http://www.eia.gov/dnav/ng/ng_prod_whv_dcu_nus_a.htm. So that 3% of Ngas demand that was replaced by wind sourced electricity could be worth close to $89 billion in savings to customers or $89 billion in additional revenues (and a lot of it as profits) by the natural gas producers. There are other factors that go into pricing for any given year, but, either an increase/decrease in demand or an increase/decrease in supply can have pretty amazing effects on Ngas prices.

The Fracking Facts
So far, this is what we do know about fracked Ngas:

1. The Global Climate Warming effects of fracked tight shale gas for the initial 20 years after production are GREATER than if a comparable quantity of coal had been burned to supply the same end user product. This is because of the large quantities of methane that gets vented after the well bore is fracked versus a conventional gas or oil (with associated gas) well, and then all that 3 million gallons or so of fluids also contains methane (often as a gas-liquid emulsion). After the 20 years, coal gradually becomes the worse choice, but not by much. And so, anyone who tells you that there is a big difference climate wise when switching from coal to fracked tight shale gas is full of crap, and at best is "weasling" you. Here is some more reading on this:
http://www.energybulletin.net/stories/2011-07-05/fracking-–-tale-gas-and-greed-and-global-warming.

2. The growth market in the U.S. for Ngas nowadays is in electricity production, but this electricity also can be made with wind turbines at similar costs, and without the air pollution of leaking methane and the CO2 pollution that comes from burning methane. So, the Ngas is not NEEDED, especially to make electricity. Ngas electricity prices cannot be accurately estimated much past a few months (though futures markets are one of the better indications of these price trends), and that inherent inability to know what the future price will be imposes a lot of costs on society. The decision to stick to Ngas as an electricity source led to widspread bankruptcies in the 2000-2001 period, for example (the Enron crime wave).In 2010, Ngas supplied less than 2.6% of the electricity in Western NY (Zone A).

3. A recent report about job creation in Pennsylvania showed that fracking has created up to 5,000 new net jobs, and up to 70% of them are being supplied with people from outside of Pennsylvania. More jobs are created by manufacturing wind turbines than are created by people extracting methane from tight shales via fracking in order to produce the same amount of electricity that is supplied by that Ngas. This is in contrast to the widely publicized "80,000 jobs for Pennsylvania" from fracking. For more on that, read the report:
http://keystoneresearch.org/sites/keystoneresearch.org/files/Drilling-Deeper-into-Jobs-Claims-6-20-2011_0.pdf.

4. The "energy payback" of a wind turbine is between 6 to 9 months, depending on the wind resource, and up to 1 year in a place with a really pathetic average wind speed. After that, the electricity is made with essentially zero CO2 pollution. Even if the methane leakage was ignored, as long as Ngas is burned, it makes CO2 pollution.

5. Just where are all the proper hazardous waste locations that will properly treat fracking fluids and how much does proper treatment cost? Will frackers pay that when they are already losing money, or will they attempt to "get creative" with the trash disposal problem, and not in a good way? And speaking of truth in labeling, how come that waste fracking fluid/spent water is not labeled as hazardous waste, and thus documented and tracked like it is with other similar hazardous waste. Chemically speaking, it IS hazardous waste.

6. Who is going to pay for damage to local roads, and who will repair the drill sites (averaging 1 to 5 acres per well)/bring them back to near original condition? And who will be the cops on this effort?

7. How is a fracker supposed to make money selling Ngas for less than the cost to produce it? Where is the business model in that with regards to steady Ngas sales in NY State?

8. Marcellus shale is not about making NY State self sufficient in methane, or of stopping the money bleed for consumers who are buying Ngas from somewhere and thus sending their money elsewhere. In reality, these are ASSET PLAYS, where the goal is to sell of proven methane reserves to oil companies who are now bloated with money, and who need new hydrocarbon reserves in order to keep their stock price up/avoid takeovers. When companies like Chevron, Shell and Exxon-Mobil buy these assets up, they will wait as long as it takes for Ngas prices to once again get pricey. So all the NY shale gas proven reserves that get bought up by petroleum companies won't necessarily be produced for over a decade, or until prices get well above $10/MBtu.

9. Where are the royalties to NY State, which just about every other government gets when hydrocarbons are extracted from underneath state lands? Everyone else is making money, yet NY State is enduring big costs and zip for profits. Who says we have smart people in charge of us?

10. Fracked gas wells deplete REALLY FAST, especially compared to conventional gas wells. Almost all of the gas that will get made from a well gets made in the first couple of years, and most of that comes in the first few months. To supply the same gas production rate, ever faster drilling rates have to be maintained. Plus, odds are, the best wells will be found initially, and then the dregs have to be tapped. According to seriously competent oil and gas expert Dr. Geoffrey Brown (co-author of the "Export Land Model", and from Texas, too), wells in the Texas Barnett Shale Gas region depleted at an average rate of 65% per year: http://www.energybulletin.net/node/46776. Here is what that means in terms of outputs for those of you not math inclined if the production decline rate follows an exponential decay pattern with a decline rate of 65% per year:

Start of year 1= 100%
Start of year 2 = 52.2%
Start of year 3 = 27.3%
Start of year 4 = 14.2%
End of year 4 = 7.4% of initial output

By then, the gas output might not even be worth the cost of operating the plant/compressing the gas to line pressures. And these are optimistic numbers, assuming a linear decay rate of 65%/yr, as in A(t) = 100*Exp[-kt] where A(t) is the production rate expressed as a percentage of the initial ouput (time = 0) at time t. In some models, production declines even faster... see http://www.fekete.com/software/feketeharmony/media/webhelp/DeclinePlus/TightGas_Theory.htm and http://www.aspousa.org/index.php/2009/08/lessons-from-the-barnett-shale-suggest-caution-in-other-shale-plays/.

11. Methane deposits are not uniformly distributed in the Marcellus Shale Region. There are "sweet spots" and wimpy well spots, and even dry holes. The quantity of extractable Ngas can vary significantly within a given county. In the Barnett Shale gas field, only a small fraction of the multi-county shale rocks actually produce more than 1 billion cubic feet of Ngas, eventually, and those are clustered together in parts of 3 counties.

12. Fracked Ngas is not renewable - once it is gone, it won't come back, and nor will the money spent on it. Investing in wind turbines to make electricity avoids that depletion process, and leaves us with something to show for all the money spent to make some electricity. Odds are, that wind turbine can go for between 25 to 30 years, though it is only warranted for 20 years.

13. Actually, the Ngas developers and drillers are not the ones who will make money, and the same goes for the investors in the well. The money makers are the bankers (loans, not investors), suppliers of special services (fracking specialists, for example, like Halliburton), and those selling equipment and services to drill and then transport Ngas. In addition, there are the gamblers on methane prices (futures, derivatives on futures prices, etc), who stand to make the really big bucks, and who produce little value to society for their efforts.

14. Who pays to clean up when "oops" events happen, such as a defective well sealing, accidents, and the spills/air pollution and associated water pollution from drilling muds and sulfide ores brought to the surface? A wildcat driller LLC can wrap up things fast and move out of state/out of country, sticking local communities and NY State with lots of costs. Fun, wow.

15. The investment made in Ngas production (which mostly runs out in 3 to 5 years with Marcellus wells) crowds out investments in wind turbines. Once you've blown the money on Ngas wells/pipelines/roads and contaminated countryside, that money is not there to invest in sources of electricity that do not deplete. Plus, the associated manufacturing jobs from making the wind turbines are not likely to be happening in NY State, because no turbines were installed. There are tremendous economic incentives to using high quality local labor to make commercial scale wind turbines, since long distance transport can add 10% to 15% on the cost of such units.

16. If you want to keep Ngas prices (while it is still being used) and electricity prices from Ngas reasonable, use less of it, and install more wind turbines! The more turbines that are installed, the more price suppression occurs on Ngas, and on electricity made from pollution based sources. By turning the drilling Hounds from Hell loose on NY and maxing out Ngas production so as to avoid installing more wind turbines, we get higher Ngas prices for heating, and no competition to Ngas with regards to electricity production, despite claims to the contrary. See http://wagengineering.blogspot.com/2011/06/merit-order-effect-in-wny_06.html for more on that topic, and how that works for WNY.

17. Finally, there IS an upper price for Ngas that is destined for electricity in NY State, and that is now set by wind turbines. At a well head price of $10/MBtu (about $11.35/MBtu delivered), Ngas users would have to sell their electricity for about 10.6 c/kw-hr (assume 42.5% thermal conversion to electricity, again a mix of single and combined cycle units). At that price, onshore wind turbines can produce electricity without any subsidies from the Federal government. Ngas will be at a competitive disadvantage if their well-head prices rise above $10/MBtu. And remember, that is the price frackers need to justify the investments made to get the Marcellus shale gas, under good circumstances, for already existing Ngas based generation units. A new unit has lots of capital costs rolled onto that, so they would need even higher prices for the electricity made using $10/MBtu sourced Ngas. And that seems like a losing proposition if there ever was one....

If you ever want examples of corporate and upper class myopia (the main beneficiary in NY State will be some of our uber-rich, as well as other wealthy located elsewhere), or else lust for gambling proceeds while sticking large quantities of upstate NY with economically and environmentally degraded lands, fracking is it. This has such great potential to be classic rape and pillage capitalism. All to supply something that we should be trying to replace and purge from our energy mix ASAP (natural gas) with renewable electricity, which makes more jobs per dollar invested, and does not leave the land, air and water decimated kind of like an expanse of evil, nasty and poisonous Swiss Cheese. And for added kicks, that methane (either the stuff that leaks into the air or else the stuff that is burned and instantly made into CO2 pollution) extracted from the Marcellus shale in lieu of using wind turbines to make electricity keeps working on the Greenland ice sheets, trapping solar heat and leading to an equivalent of massive mudslides, only with massive ice-chunks. The ice-sheet decomposition is THE greatest threat to NY State, because raising ocean levels 20 feet (from this ice melting) within a few years is going to flood much of Long Island, NY City and a fair amount of land along the Hudson River. Nothing like making 6 to 10 million people homeless in a state of 19.5 million as a way to send the economy of that state down the drain real fast and in a pronounced manner, too...

Oh well, at least that might cause the shutdown of the Indian Point Unit 2 and 3 reactors (Unit 1 is supposedly no longer a threat). I guess if you look hard enough, there can be a little gem of something good in the septic field that is the Marcellus Shale play in NY State. Evidently, nothing else has worked to date to shut those things down, so I guess Pan B is to activate the Global Climate Change option ....?

DB

Marcellus Shalegas: The Swiss Cheesing of WNY - Part 1

2011-07-04T12:11:00.003-04:00

Rumors are floating that Governor Cuomo is pressuring the NY State DEC to hurry up and finish the SGEIS (Supplemental Generic Environmental Impact Statement) for fracking - alias "horizontal drilling hydraulic fracturing of tight shale gas deposits" - in New York State. The "compromise" will be that no fracking will happen in the NY City drinking watershed (in the Catskill Mountains) and also the Syracuse one. After all, if NY City's water supply gets poisoned or even slightly degraded with bacteria/sediment, the improvements needed to "pre-purify" this water up to drinking water standards could cost several tens of billions of dollars. In case you didn't know it, NY City owns or controls large sections of the Catskill Mountains, and the water collected in those water reservoirs is very high quality with respect to drinking (plus, no or minimal pumping costs - it flows by gravity to NYC). But, for those who are not in these protected zones, most are SOL, though a tiny few might make out like alcoholics who are lucky enough to hijack a fully laden booze truck.

So, money talks, what's new about that? And fast, speculative money talks really loud in NY State - after all, the state gets a big haul of it's income tax revenue from Banksters, brokers and other Big Casino (Wall Street) players, despite the lack of an effective Stock Transfer Tax that exists in places like London, England.

Anyway, there are four things that you should know about the Tight Shale Gas (which requires fracking to produce it) business - it is a FAST MONEY play, it requires lots of money and bank loans to extract it (that's one aspect where Wall Street/Banksters/speculators come into play), the wells that are "stimulated" generally deplete really fast, and that the whole business is really an ASSET play, not an effort to provide a long term, home grown solution to the energy needs of NY State residences and businesses.

So, here is a bit of a discussion on this, and how it relates to wind turbine derived electricity:

http://www.thinktwiceradio.com/yvonne/audio/110623b.mp3

Check it out; hopefully it will be informative to you, and get you thinking.

As for the rumored "frack attack", keep in mind that it is all about what special band of brigands (a fancy word for pirates) gets it's money, fast, faster and/or fastest. It is really not about the energy to be obtained, nor about the creation of significant quantities of jobs that now unemployed or underemployed of WNY'ers can obtain. And the legacy will be a rural landscape that will have more of a "swiss cheese appearance", especially from the air, where the numerous 5 acre sized "pads" and interconnecting roads/pipelines will be visible. As for the toxic waste left over (spent drilling muds, spent fracking fluids, "produced water", sulfide containing rocks that get eaten by bacteria and turn into sources of sulfuric acid pollution (mine waste phenomena), rad-waste (the shale rocks tend to be radioactive, and the gas often has to be "aged" to allow the radon contaminant to decompose to "background" levels)), if the cost for proper treatment can be avoided/side-stepped/dumped onto someone else, well, that's more profit for the severely profit-deficient drillers. For example, try this one for size:
http://www.energybulletin.net/stories/2011-06-27/leaked-docs-throw-doubt-gas-prospects-jun-27 (a set of 3 NY Times articles, and pretty darn awesomely good ones, too).

Another great line (as in, something said by confidence artists and associated grifters/Global Climate Change deniers) is that using the methane from fracking Marcellus shale to make electricity is less damaging to our planetary climate control system than is burning coal to make electricity (the concentration of CO2 and to a lesser extent, methane, in the atmosphere is very important to the temperatures we have on the surface of the earth). But, factually speaking over the next 20 years, NOT SO! It turns out that so much methane is vented from shale gas efforts (even compared to "regular" natural gas drilling) that this causes MORE heat retention in our atmosphere than would happen by just burning coal in an existing coal burner, like the Huntley facility in Tonawanda (now close to 86 years old, though there have been a couple of boiler change-outs and other improvements). Fortunately, methane only has a half-life in our atmosphere of about 10 years (it gets oxidized by UV light and oxygen in the air into CO2 and water), but it is a much more intense absorber of infared radiation in the wavelengths corresponding to temperatures on the surface of our planet while it is floating around in the air. See here:
http://www.energybulletin.net/stories/2011-07-01/life-cycle-greenhouse-gas-emissions-shale-gas-compared-coal-analysis-two-conflict.

Of course, using wind turbines to make electricity avoids both loser propositions of depletable coal and methane usage, and it creates a lot more jobs in the process with respect to the manufacture of those items. But that is much too much like common sense, and besides, that creates middle class jobs to a much greater extent than does a frack attack. And in some circles, creating middle class jobs in NY State is not deemed to be socially acceptable- although none of those types seem to live in my neighborhood, at least that I know of (the Secret Billionaire's Club of Buffalo?). Plus, fracking can create financial bubbles - including gambling on the future price of natural gas and of electricity made from that natural gas - and can lead to huge banker/speculator takeover fees when the proven shale gas reserves get bought up by oil companies who presently are stuffed to the gills with cash and have nowhere else to invest it the hydrocarbon business. But that is a subject for another post...

DB

General Electric's New Low Wind Speed Turbine

2011-06-29T15:31:00.006-04:00

Introduction
Last month GE introduced a new model of wind turbine that is based on their extremely successful 1.5 MW unit (the 1.5 sle, which has a 77 meter rotor and (usually) an 80 meter tall tower). There are more than 10,000 of the GE 1.5 MW turbines installed in North America, which is about 30% of the US-Canada market. The new unit is their 1.6-100 - a turbine with a 100 meter rotor diameter and a 1.6 MW generator, incorporating a variable speed generator and their own "IGBT" variable frequency to 60 Hz converter. For example, here was one of the first announcements of this product, just in time for AWEA's annual convention/product exposition:
http://www.nawindpower.com/e107_plugins/content/content.php?content.7925

Discussion
If you have been to one of the AWEA annual conferences, it is a bit of a giant sales pitch/show and tell/deal making session. Many of the main salespersons carry just about every form of personal communication device on them, and sometimes multiples ones of these, and they all look both confident and very hyper. There are many multi-million and multi-hundred million dollar deals made at these sessions, or right after them, when wind turbine farm developers and product vendors meet, compare prices/services/claims and try to do a deal. Sometimes these deals can be worth billions. And that's got to be some intense stress....

At their product launch, GE stated that they have about 500 MW of sales commitments for their new turbine, which, to them is about $1 billion in sales of just the turbine (and another $250 million would be needed to install them). So, not a bad day in sales.

Speaking of sales, here is the product brochure:
http://www.ge-energy.com/content/multimedia/_files/downloads/GEA18628_Wind%201.6%20Brochure_r11.pdf

GE's entrance into the Low Wind Speed Turbines (LWST) market segment of commercial wind turbines follows several others, including Vestas (their V100 x 1.8 MW unit), RE Power (1.8 MW x 100 meter rotor diameter), Nordex (N117, a 2.4 MW x 117 meter rotor diameter), Siemens, and a few others. The LWST and the offshore segments are probably going to experience the greatest growth in the wind energy business for some time, and at the present, there are still a relatively few models/manufacturers of them compared to "regular" or fast speed ones.

A LWST is characterized by a power ratio of more than 4:1 (rotor area in square meters divided by the generator rating in kilowatts). The power ratios of the Vestas, Nordex and new GE models are 4.36, 4.48 and 4.91, respectively, while the "regular GE 1.5 sle has a power ratio of 3.10, which makes the "regular" model great for high wind speed locations but a poor performer in places where wind speeds are more average. By this measure, GE has the most "low wind speed friendly" unit on the market, at present. But who knows, maybe there will be a LWST technology race - it sure beats the arms race, after all.

About 13% of the land area of the US is well suited to "regular" models, while over 50% of the U.S. land area is more suitable for LWST units. So, potentially, this is a huge market. Furthermore, in most high population areas, wind speeds tend to be moderate, so the LWST are well targeted to where the electricity demand is located, which is different than the wind resource. In many cases, it makes more sense (is lower or equivalent cost) to install a LWST close to a load center (electricity consuming region) than it is to install mass quantities of high or medium wind speed units in a fast wind location (U.S. Great Plains, such as Montana or Wyoming, for example) and then also install one to two thousand miles of very expensive transmission line. Those lines can cost up to $3 million per mile, so this adds up...

Of course, it costs more to make a LWST with the same rating as a regular unit, and much of this is tied up in the blades and also the towers. Bigger blades mean stronger towers, even at the same heights used as a regular unit. And bigger blades weigh more, which means more of that expensive epoxy resin is required. Blade mass goes up at approximately the 2.5 power of the blade length, so the mass of a 48 meter blade is about twice that of a 36 meter blade. And mass is money.... In addition, taller towers are often used, which also means more money, and more mass per tower length for the bottom tower section. The GE 1.6-100 will probably cost about $4 million to buy and install, while the regular GE 1.5sl would cost about $3 million to buy and install. But, the benefit is greater energy production from a given wind speed.

Conclusion
The LWST era has come of age, and these units are especially appropriate for NY State and most of the inland regions of the Great Lakes region. One of the first large installations of these is going to be in central Michigan, just north of Lansing, where 300 MW of the Nordex N117 units are presently being installed (made in Arkansas). There have been several 50 to 100 MW V100 projects sales announced in the US (to be made in Colorado) in the last year, though none so far in NY. LWST are THE key technology needed to replace ALL pollution sourced electricity (coal, nukes, natural gas) in NY State, and will produce energy at lower costs than are possible than with offshore turbines (though using both, and offshore especially for Long Island) is the wise way to go).

Too bad there is no indication of a combined large sales/installation effort coupled to large scale manufacturing of these IN NY state. This could provide somewhere in the area of 100,000 manufacturing jobs for NY, providing there was a will to replace pollution sourced electricity generation that is often dangerous and risky (nukes), a major money bleed (coal and natural gas purchases from out of state) or just plain a big source of air and water pollution (Marcellus Shale gas, coal). And those jobs would be real wealth creating jobs, and difficult to outsource. Plus, since transporting 48 meter long blades, 50 ton tower sections and 50 to 100 ton nacelles long distances is costly, making them locally can save up to 10 to 15% on the installed cost.

For "community wind" applications (like the water/sewage plant in communities, or to provide some of the electricity for a town/school), these LWST units have a lot of potential. Or for projects where there is only room for one or a few turbines, these new wind turbines will produce far more energy than a comparable single /few units of "regular" wind turbines. Here is a graph that compares the average power output (kw-hr per year divided by 8766 average hours in a year) versus the wind speed for a GE-1.5 sle and a GE 1.6 x 100 m unit. If you've only got room for one, this is the way to go...

So, there's today's "room for improvement" idea.

DB

The Mortgage Mess and lack of Wind Energy Connection

2011-06-21T10:54:00.005-04:00

Installing Siemens 3.6 MW x 120 meter rotor wind turbines recently, in Great Britain. For perspective, the hub height is 90 meters off the surface at Walney2 (yellow part is 20 meters above the water, white tower is 70 meters long, blades are about 58 meters long). Impressive!

One of the reasons for the lack of investment in the wind biz in the U.S. in general and especially in NY State has been the "availability" of other investments, particularly property, both residential and business. But, looks like that was significantly not so (in that, there really was very little REAL viable investments to be made in real estate), and the investors who put a lot of the money into real estate via "Mortgage Backed Securities" (MBS) in the last decade were defrauded by the hundreds of billions of dollars. Looks like counties were also defrauded out of mortgage recording fees for good measure, too, though that seems to be chump change in comparison.

http://www.dailykos.com/story/2011/06/20/987022/-Finance-Capitalism:Has-It-Eaten-Its-Own-Entrails-in-Mortgage-Fraud-Debacle?via=spotlight

So these never were valid investments. Meanwhile, the hundreds of billions worth of investments in wind turbines needed to replace pollution sourced electricity and the bonds that should have been issued for mass transit construction (and thus replacing oil consumption) never happened in the U.S. Nor did the jobs associated with real wealth creation that go with renewable energy and non-petroleum based transportation.

So far, this story is largely buried, and the public remains unaware of this. And so far, almost all of the perps of these frauds have got away with their crimes, and with a lot of money too. Crime did pay very nicely, while our country will pay for this bad investment "in the concept of air" versus investing in things that require manufacturing, and avoid the need to pollute to make electricity.

Also, along those lines:
More nuke FUBAR - no, not another Fuku type event, just more "drip,drip, drip" on these wretchedly bad investments (money, morality, ecology, job creation, lots of levels....):
http://my.firedoglake.com/somethingthedogsaid/2011/06/21/48-of-65-us-nuclear-power-stations-have-leaked-tritium/

And on the good side of things:
Ontario (unlike NY State), where RENEWABLES = LOTS OF JOBS:
http://www.canwea.ca/media/release/release_e.php?newsId=118 (also downloadable report)

And ANOTHER darn offshore wind farm gets commissioned and is now "ON" in Europe:
http://www.offshorewind.biz/2011/06/21/walney-1-offshore-wind-farm-in-full-operation-uk/
This one is "only 184 MW, "only" cost about $US 800 million to install, "only" created about 13000 job-yrs of direct employment, and is only Part 1 of the Walney complex, with part 2 now under construction:
http://www.offshorewind.biz/2011/06/21/two-turbine-installation-vessels-install-eight-wind-turbines-at-walney-2-uk/. Part two will also create a similar number of jobs, and in combination, Walney 1 and 2 will displace the natural gas that would have been needed to supply
a 165 MW natural gas facility running at 90% of the time, and displacing 8.8 billion cubic feet of methane that Britain would otherwise have to import in return for the export of $53 million/yr at today's low prices (historically, the price should at least be double the present price) - money that Britain would also have to borrow, as their imports now exceed their exports, significantly.

Sound familiar?

Geez, you only have your unemployment to lose, in return for installing renewables on a significant scale. Do you like all that unemployment that seems to be so abundant on the Niagara Frontier these days? So what's the problem? We could make such turbines, and make the vessels that installed them. We could make items like this substation and the underwater electric cables that connect this substation to land, and also the vessel that installed this unit, too:
http://www.offshorewind.biz/2011/06/21/rambiz-heavy-lift-barge-installs-top-section-of-walney-2-substation-uk/
That we aren't helps explain the lack of employment, and high unemployment in these here parts.

DB

The June 2011 NYSERDA RPS Analysis

2011-06-12T13:52:00.006-04:00

Introduction
The June 2011 NYSERDA Renewable Portfolio results are out (see http://www.nyserda.org/rps/pastSolicitations.asp#pastsolicitations for RFP 2226), and 315 MW of Renewable Energy Credits (REC's) were auctioned at an average price of $22.01/MW-hr with a total value of about $191 million. Over a 10 year period, this means that an average of 867,873 MW-hr per year of electricity (or an average of 99 MW of net production) will be aided by about 2.2 c/kw-hr. This is part of goal of getting more non-polluting electricity into the NY State electricity supply, up to a value of at least 30% by 2015.

Most of the awards went to wind farms, though there were also awards for landfill gas systems (each one of those is about 4 to 6 MW in size, and there were 7 of those). Some of the winning bids for wind farms are also split across 2 years (for example, half of the output one year (at one price) and half at another price - this minimizes the risk of a low price degrading the economic viability of a given project. And lately, many of the proposed wind farms get canceled because even with a higher RPS bid, the baseline (= NYISO generated price) is just too low, even with the Federal and state subsidies. However, maybe this year we will get lucky.

Discussion
The wind turbine awards were for the following projects:

a) Stony Creek, Wyoming County (Orangeville), 52.5 MW (GE 1.5 MW) Invenergy
b) Howard, Steuben County, 65.5 MW, (Nordex 2.5 MW N100), EverPower
c) Allegany, Cataraugus County, 72.5 MW, (Nordex 2.5 MW N100), EverPower
d) Marbel River, Clinton County, 218 MW (Gamesa 2 MW), Horizon*

* The Horizon project will be spread over this RFP and the previous one (March 2010), which has a similar average RPS price.

In all of these projects, a ridiculously low NYISO price of under 4 cents/kw-hr will prevail for some time, and this is not good as far as project financial viability goes. The 2.2 c/kw-hr will raise the effective electricity price to 6.2 cents/kw-hr or less for the next few years, until prices finally are pulled up by increasing coal and natural gas prices, and maybe (if we are lucky) by an improving economy generating increased demand for all kinds of things, including electricity.

Another motivating factor for these projects was the coming end to the Section 1603 Grants, which can be used for suitable project owners instead of the Production Tax Credit (PTC) (owners must be capable of utilizing the PTC, even if they choose the Sec 1603 approach). The Sec 1603 Grants work best when the average net efficiency of the wind projects is 30% or less of the nameplate capacity of the project. And since every project installed in NY to date fits that approach, odds are, this is what will be used.

In the S1603 approach, upon completion by a certain year as well as start by a certain year, the project owner gets 30% of the value of the wind farm invested back as a cash grant. That is approximately what the PTC would have been worth, once the time value of money is computed. But, since money now is worth more than in the future, almost all wind farms since 2009 installed in the U.S. have been done via the S1603 approach (see http://eetd.lbl.gov/ea/emp/re-pubs.html).

Many of these projects have been years in the making - for example, the Howard farm project was first started in 2004. It has been delayed by 3 years due to the financial collapse (was scheduled for completion by 2008) wrought by George Bu$h's Great Recession. However, this delay may be advantageous, as the wind turbines proposed are now much better suited to NY winds than they were 3 years ago - especially with respect to the larger blade size to generator rating ratio.

The only wind farm of significance in the last two years installed in NY was the Hardscrabble wind farm (74 MW, Gamesa 2 MW G-90 units on 100 meter tall towers), which cost $200 million, or about $2.7 million per MW of capacity. This project was estimated to have a 30% net output, so the capital cost would be $9 million per delivered MW. It also used the S1603 credits instead of the amazingly complicated PTC system. That extra 20 meters of tower height (typical wind turbine towers in the US are 80 meters high) cost at least $500,000 extra per tower.

In today's economics, a wind project owner has to come up with at least 60% of the installation/purchase cost (equity) to be lucky enough to get a loan from a bank for the
remaining 40%. The interest on the loan gets added to the cost of the project to determine the amount of tax deduction income (convoluted, but that's how it goes). The rapid depreciation (MACRS) incentive is by far the most important financial incentive for wind turbine projects, and interest payments on loans add to the amount of deductions on other income that project owners can monetize.

For the Hardscrable project (similar to the Allegany one), a $200 million project cost is also a $60 million S1603 grant. The loan portion of the project would be $80 million (40%), and over a 6 year period, the interest on that would be around $36 million. Add that to the $200 million investment, and total deductions from taxable income (usually not associated with a wind farm) would be $236 million. At a 35% Federal tax rate and an 8% State income tax rate, this gives a legal tax avoidance of close to $100 in 6 years. Thus, for a $200 million investment, total avoidances of other taxes would be nearly $160 million, or close to 80% of the project cost. Odds are, the $60 million S1603 grant would be used to pay back a part of the equity (a short term investor who would otherwise charge a high rate of return for loans/equity), leaving approximately an equal split between loan and equity in the project. But all projects have their special twists.

So what would the cost to operate such a facility be? In general, the taxes/insurance/land lease/other costs add up to $20/MW-hr, according to a study last year (see also http://eetd.lbl.gov/ea/emp/re-pubs.html). The rest of this is capital costs (15% return on investment is the target) and loan/principal payments. At $8 million/yr for the bank loan ($41/MW-hr) and $10.5 million for the equity return ($70 million (includes a $10 million "fee") after the $60 million S1603 repayments, or about $54/MW-hr), this adds up to roughly $95/MW-hr. However, there is that $100 million in MACRS/interest on loan avoided tax, which is the same as "tax income". Over a 20 year period this is roughly $5 million/yr, though instead it comes in mostly in the first 3 years. That would "average" about $25/MW-hr. So subtracting the $25/MW-hr from the $95/MW-hr leaves $70/MW-hr in capital repayments and $20/MW-hr in O&M expenses, or a total of $90/MW-hr as a needed electricity price.

If the electricity price managed to get to $40/MW-hr, and NYSERDA's RPS payments were $22/MW-hr for the initial 10 years, the initial income stream would be around $62/MW-hr, which is not $90/MW-hr, and instead is $28/MW-hr shy of the target, or about $5.5 million per year less than needed. The only way this can be rectified is if bank interest rates were lower (not likely, even though the cost of money for banks is really low these days), the price of electricity was to rise back to normal levels of around $60/MW-hr or else lower equity payments were used, at least for the initial few years. If the loan was to only last 10 years, payments during this time would be higher even at a 5% interest rate (which is not really possible to get), though afterwords, that burden would go away. Another possibility is that other projects would not be as costly as the Hardscrabble one was (80 meter tower heights used, saving $500,000 per turbine), which would save about 10% on the project cost).

Conclusion
These turbine projects look really financially iffy at present, but were probably hurried along by the imminent demise of the Section 1603 program, as well as the unlikelihood of a renewal of it with Republicans in control of the House and in de-facto control of the Senate via the filibuster process. In many ways, they are a bet on higher future electricity (NYISO) prices, as they are nowhere near viable at existing prices. The higher future electricity prices are a bet on higher Eastern U.S. coal prices (due to Chinese/Indian purchases of West Virginia coal) and higher natural gas prices (after all, with the required marginal price for minimal return on investments now near $10/MBtu without proper fracking waste-water disposal (and more with proper disposal), but current Henry Hub gas prices not even reaching $5/MBtu - see http://www.oilnergy.com/1gnymex.htm), it does seem like a reasonable bet. But then, most bankers who could be financing more wind projects don't like gambling anymore - that didn't work out so well for most, as that is what caused the Great Recession of 2007 and effectively still in progress...

With a combination of a rise in NYISO electricity prices back to the historical average of $55/MW-hr, and lower initial equity returns, the loss in the initial 10 years could be minimal However, once the NYSERDA RPS payments disappear, only a higher electricity price will save this project from that dreaded "failed to meet earnings projections" declaration.

Anyway, we wish these project owners good luck, and maybe they have tapped into some patient, less expensive capital and loans. The simplified version of the production cost may also be higher than certain people can obtain via a better financial analysis, lower cost loans and more patient capital.

On another note, the NY RPS schedule (old one, not the enhanced one) more or less called for roughly 480 MW of new wind turbine capacity to be installed each year, on average. At the end of 2010 there should have been about 686 MW of average power output, but instead, there was only about 290 MW average output. So far, it is hard to view this as a success, and perhaps the term "not a complete failure" might be more accurate. The combination of lower than expected net outputs (22% vs 30%) and lower installed capacity (1276 MW vs. 2288 MW) at the end of 2010 is also one of those "fails to meet expectations" moments.

And more importantly no significant wind turbine manufacturing and assembly factories are operating in NY State to date. That is the real failure, as that is where the jobs are. The Gamesa wind turbines are largely assembly/manufactured (towers, blades, nacelles) in Pennsylvania. And those Nordex units (especially blades and nacelles) are manufactured in Arkansas. Given the significant cost adders for transporting these (even by train, it adds up), NY has still failed to make the sale that most regions with lots of wind turbine installation potential do make, even those with equivalent or higher labor costs. Part of this may be the hit or miss nature of the RPS, but much of this is because of the way that wind turbine electricity is priced.

Meanwhile, across the border in both Quebec and especially Ontario, the renewable energy gold rush (especially wind turbines) continues, using policies specifically designed to get manufacturing jobs for these provinces from wind turbines. The use of the "magic invisible hand of the marketplace" has also once again proved to be, like the NYISO pricing system, ill suited to Green Energy and Green Jobs. And that certainly leaves room for improvement.

DB

Merit Order Effect in WNY in 2010

2011-06-06T14:31:00.011-04:00

Introduction
In 2010, several wind farms had at least a full year of commercial operation - and one of them (Wethersfield 1) has been going for 10 years. Thus, it is possible to test if there is a likely Merit Order Effect (MOE) present in our part of NY. Apparently there is one, and one to the benefit of WNY electricity consumers and one NOT to the benefit of WNY pollution sourced electricity generator owners. The estimate is that customers were saved $31 million on their 2010 electricity bill ($604 million was spent to make an average of 1762 MW at an average price of nearly $39.22/MW-hr). Without wind power in the region, that extra $31 million net would have been scarfed up by (mostly) the AES and NRG corporations.

So, here is a link to the paper (12 pages, with some graphs) in .pdf format (214 kb):
http://www.4shared.com/document/IKgU61cv/Lee050411e.html
titled "Estimate of the Wind Power Merit Order Effect in Western New York State in 2010".

Discussion
There are many examples where adding significant quantities of wind energy into a "NYISO-like" market (where hourly auctions determine the marginal price, and where all bidders for that hourly period get that marginal price, regardless of the actual cost or a steady price needed to obtain a reasonable return on investment (profit rate)) drops the marginal price. In Europe, prices can even go negative - that is, for some time periods, polluters using coal or nuclear generated electricity actually have to PAY people to take their electricity for that time period. Here are some examples:
http://www.eurotrib.com/story/2010/7/5/7516/54118

And here is the a reason why the owners of coal burners, nukes and natural gas suppliers are not happy with wind turbine installations:
http://www.eurotrib.com/story/2010/4/25/62541/6173
http://www.eurotrib.com/story/2009/5/1/174635/6513

In places like Texas, negative prices are not allowed, so when prices drop to some preset limit, wind turbine generators are forced to shut down. This is called "economic curtailment", and in 2009, about 17% of the wind energy that could have been sold was prevented from being sold because it would have resulted in negative prices for electricity not sold under Power Purchase Agreements (most wind sourced electricity is sold via PPA's in Texas). This basically ruins the profitability of wind farm investments. And if it was your task to hobble any competition to pollution sourced electricity and for the fossil and nuclear fuels that are needed by these non-renewable generation systems, that would be a fine approach to pursue. After all, isn't Business a bit like Hockey Night in Buffalo, the "on the boards" part?

In 2008, German customers had a net savings of Euro 5 billion due to the MOE. In effect, this came out of the extraordinary profits that polluters can make whenever demand has to be supplied by a combination of mostly low production costs (nukes, coal) sources and some high priced ones (natural gas, oil). In addition, there were about E2.9 billion in avoided imports of natural gas and less need for coal (mostly imported in Germany) (E2.7 billion). Finally, the employment resulting from the manufacture of (plus some installation jobs) all those renewable energy systems avoided over E5 billion in unemployment costs. After all, where else do you employ ~ 300,000 people in high value added manufacturing these days? Furthermore, there were lower natural gas prices that resulted from lower demand for natural gas and coal caused by not using as much natural gas and coal to make electricity, so industrial and residential/commercial users also saved money.

And just what does it mean to cream off the extraordinary profits that, in WNY, would have gone to the 3 major coal burning plants (NRG Huntley, NRG Dunkirk, AES Somerset) if wind turbines had not made an average of 85.1 MW during the year? Odds, are, much more than all the protests of environmentalists who protest against the use of coal to make electricity, despite their best intentions of trying to do some good.

Most importantly, maybe the marginal pricing system (scam?) might finally get exposed to public scrutiny. The marginal pricing auction system (Locational Based Marginal Pricing, or LBMP) was supposed to introduce competition into the formerly monopoly centered electricity generation business, and thus deliver the lowest price to consumers. But, that is theory; reality is quite different. In reality, the owners of low priced generators have discovered that they do not want to be the only generators in a region (as in NYISO A, or NYISO West), because then prices would remain at rock bottom levels. Besides, who needs an auction when there is no effective competition between fuel source suppliers.... Instead, to maximize the profits of low cost electricity producers, it is desirable to have most of the electricity sourced in NYISO Zone A by these ultra low cost, fully paid off coal burners and some of the electricity provided by higher cost natural gas sources. Even though natural gas (Ngas) prices are currently in the pits, brand new combined cycle (ultra efficient) plants cannot compete with the big coal burners. The thermal cost of Ngas delivered to WNY is about $6/MBtu (Ngas at $4.70/MBtu plus delivery at $1.30/MBtu), while coal, even at an expensive price of $75/ton for Appalachian still is only $3/MBtu on a thermal basis. The slightly better efficiency (50% for Ngas, 40% for coal) of methane gas turbine combined cycle systems (GTCC) just can't overcome the difference. And Ngas prices are presently only 50% of where they need to be to justify further investments in new wells.... In WNY, over 450 MW of coal burner capacity has been taken out of the market (boilers shut down), yet still, prices are deemed too low for new electricity generation capacity...

So, that's how big profits can get made by coal burners in WNY, and when wind energy comes on line, it replaces some or all of the Ngas sourced electricity for that given hour, and thus drops the bid price of electricity. So the owners of the coal unit can make a regular profit for that hour, but not an extraordinary one. And since that is what they really crave, and what the executive management gets compensated for by extra bonuses, that is mostly what they care about. So, by forcing those operations to survive on regular profits, consumers get a better deal, but the owners of the coal burners don't get those fabulous extraordinary profits.

Of course, Ngas suppliers are not made happy by this turn of events, either. Ngas prices are quite sensitive to changes in demand for Ngas, and if less Ngas is being burned to make electricity, that puts pressure on suppliers to lower their price or at least keep prices less than they would rise to if demand for Ngas (and that includes fracked Marcellus and Utica Shale Ngas) was to increase. And since they, too, crave extraordinary profits like a junkie craves their fix and they really hate the thought of being saddled by regular profits (they would not have invested in the well if they thought that competitive pricing and regular profits, if any, would be the outcome of their investment), the Ngas supplier's happiness (and consumer's sadness) is affected by how electricity gets made and the prices that are paid for this electricity. But, if you use Ngas for home and business heat, or don't like paying higher taxes for schools or governmental operations (caused by various governments paying higher prices for Ngas AND electricity), then you won't have much sympathy for the Ngas folks.

Besides, coal and Ngas tend to be bought from outside of NY, and we have to export money to import those fossil fuels. Thus, wind energy also helps keep local money local, though there are ways to do a better job at that than is presently the case. And wind turbine derived electricity prevents the export of our wealth and income to people who often really hate NY'ers, like the oil and gas people in Texas and Oklahoma, or the truly despicable management in companies like Massey Energy (who in a just world would be on trail for murder of 29 coal miners in West Virgina from last year). But then, we have room for improvement on the justice aspect, too, as the Golden Rule seems to morph into the Rule of Gold far too frequently these days.

Anyway, if you get a chance, check out the paper. Got any comments?

DB

Timber Road Wind Farm in Ohio

2011-05-19T15:19:00.002-04:00

Introduction
Horizon wind is now owned by the international electricity company and also wind turbine developer EDP (Energias de Portugal - see http://www.edp.pt/en/aedp/Pages/aedp.aspx). They are a hugely capitalized company that has decided to grow by building and installing and often owning commercial scale wind farms. Recently they started construction of the Timer Road project in Ohio - see http://www.windpowerengineering.com/tag/payne/

Discussion
EDP bought Horizon Wind from Goldman Sachs (the Banksters Extraordinaire) several years ago for a bit over $2.2 billion. Goldman had purchased a company called Zihlka a couple of years earlier for a bit over $1 billion; the previous owners just did not have the capital to do big wind farms, and obviously Goldman did have that. One of their first projects was to install Ny's largest wind farm (Maple Ridge) in partnership with Atlantic Renewables (who got bought up eventually by Scottish and Southern (big Scottish electric utility), who then got bought up by Iberdola. Little Fish getting eaten up by bigger ones... Anyway, the combined Maple Ridge is about 322 MW, composed of 196 x Vestas V82 x 1.65 MW units (all imported from Denmark via the port of Oswego). Since then, EDP/Horizon has been developing away.....

Which brings us to the 99 MW Timer Ridge wind farm. This is the first large scale development in Ohio, and it will cost around $200 million to buy the turbines (55 x Vestas V90 x 1.8 MW) and install them, and given how bad the recession has been to Ohio, the 200 or so construction jobs will be greatly appreciated. These turbines will be made in Colorado (tower, blades AND nacelles) and then shipped by train to the closest destination to the site; Vestas prides itself in minimizing transport costs. The location can be seen from this site: http://www.thewindpower.net/wind-farm-map-16017.php?PHPSESSID=b1e39c0034e9625983efd19143c5f9c4
The wind farm will be located in a really flat part of Ohio, near Fort Wayne, Inidana (NW Ohio), which is one of the windier parts of the state. Indiana now has over 1000 MW of wind power, and this has been possible because of the "old" monopoly style electric system (same in Ohio), where the grid monopoly in that part of the state also owns most of the generation facilities (generally coal burners, some nukes). The delivered price of electricity in both Ohio and Indiana is much cheaper than in NY, despite the low price for generated electricity these days in WNY (less than 4 c/kw-hr). Of course, all this coal based electricity is highly polluting, so cheapness comes at a price...

Anyway, what made the Ohio wind farm possible was a 20 year long term Power Purchase Agreement between Horizon and the local monopoly in that part of Ohio/Indiana (American Electric Power, or AEP). In Ohio, monopolies were forced by state legislation to buy or source at least 12.5% of their electricity by some recent legislation passed by Democrats in 2010 (Senate Bill 221). Obviously, no such legislation would pass now in Ohio, given the current crop of reactionary Republicans, who are now extremely unpopular after just a few months in office.

The V90 units (see http://www.vestas.com/en/wind-power-plants/procurement/turbine-overview/v90-1.8/2.0-mw.aspx#/vestas-univers) come with either an 80 or 95 meter tower option, but no details are available, so far. The V90 turbine has a power ration of 3.53 square meters of rotor area per kw of generator capacity, which is higher than most turbines in the US (average is about 3.1). And it turns out that this is a very economical way for AEP to get their electricity. Supposedly this will provide for 27,000 homes, and at about 10.5 MW-hr/yr per house, this implies about a 32% to 33% net output for the turbines. There are also many Ohio companies who make components for these, including Timken (bearings). Jobs are good....

AEP has been a staunch proponent of pollution based electricity - notably coal and nukes. However, they will do fine by this project - no capital required, and all the costs get passed on to customers, anyway, via the PPA. Nuke based electricity would be at least 3 times as costly (well over 20 c/kw-hr on a minimum $12 billion investment), and that would have been an epic money-loser, generating lots of frowns on Wall Street.

As for NY State, so far, no PPA's seem forthcoming from any company, or from the two NY State owned utilities, NYPA and LIPA. The no PPA scenario is an unfortunate consequence of our gambling based electricity pricing system, where no incentives for long term actions (like a 20 year PPA) seem to exists - everything is short term based. Oh well.... And until that happens, don't hold your breath waiting for any new wind farms in NY State, though there are rumors of Evergreen wanting to install their first NY wind farm near Hornell... No banks will loan money unless a price is defined, as the "maybe you'll get your money back and maybe not" doesn't cut it these days. And thanks to 3 years in a row of enormous losses by electricity price hedgers, that option is also closed...

DB

The Year in NY Renewables - 2010

2011-05-17T08:03:00.007-04:00

Introduction
The NYISO 2011 "Goldbook" recently came out online - see

2011 NYISO Load and Capacity Data “Goldbook“ http://www.nyiso.com/public/webdocs/services/planning/planning_data_reference_documents/2011_GoldBook_Public_Final.pdf. This document lists all electricity generators in the state, where they are located, what their rated capacity was, what the energy source for that generated electricity was and how much electricity they sold onto the grid. The total quantity of Made in NY electricity was 139,357.3 GW-hr/yr, which is an average output of 15,908.4 MW (15.9 GW). This was 42.2% of the rated winter output and 39.4% of the rated summer output. Average imports of electricity (mostly from Quebec, Ontario, Ohio and Pennsylvania) were about 2.3 GW, or about 1/8th of the electricity consumed in NY State.

Discussion

Most of the electricity made in NY is "pollution sourced" - from nukes, coal, natural gas and oil, but a considerable portion - close to 20% - comes from renewable energy sources. Most of that is hydroelectricity based. If pumped hydroelectric storage is also included, NY has the capacity to instantaneously make 6430 MW, though in 2010, hydroelectric output averaged about 2851 MW, or 17.9% of the electricity made in NY. This averages about 44.3% of the rated output of our hydro capacity. When the pumped hydro (which was 1400 MW of capacity, but only utilized 6.5% of its capacity - maximum is about 50%, since pumping has to also take place) is ignored, an average of 2760 MW was produced by 5031 MW of capacity, with a net utilization of about 54%.

Of course, most of the hydro generation takes place at Niagara Falls (1375 MW plus 57.3 MW from the pumped hydro unit) and at Massena (756 MW), and this adds up to 77% of NY's hydro generation. However, NY has a lot of small and medium capacity hydroelectric generation. There are 338 small and medium hydro units that made a total of 629 MW, averaging about 47.5% of the 1323 MW of listed capacity. Almost all of this small and medium hydro has been operating for decades, though some potential expansion may be possible. Contrary to popular belief, hydro output varies considerably on a yearly and seasonal basis - the biggest water flows obviously happen in the spring with snow melt season. NY State is not a desert, and the water and hills combination is great for hydroelectricity generation.

The poor utilization of pumped hydro storage - especially at Benheim-Gilboa (1160 MW capacity) is somewhat sad, and one of the reasons downstate prices tend to be higher that they should be. However, this is because the stored energy is needed to prevent a blackout that could happen if one of the two nukes at Indian Point (25 miles north of NY City on the Hudson River) has a sudden cut-off (and these do happen) in production. When those happen, the Gilboa facility kicks into gear, while arrangements are made to reroute 1100 MW to the NY City area (there is only 8 hours of storage at full output at this site). Meanwhile, at the Lewiston pumped hydro site, the 57.3 MW of average output is 23% of the site capacity, or about half of what could be produced from this unit. That means that Gilboa's investment is tied up supporting those highly undesired nukes at Indian Point - this very expensive NY State owned site was only used 2.9% of its rated capacity. This is a great example of corporate welfare, as those nukes should be paying NY State back for its cost and operation, since it's main use is in supporting those nukes. Gilboa could be used to stabilize a lot of wind energy output for NY State (about 2,000 to 10,000 MW of capacity, or close to 7 times what is now installed), but that can't happen as long as those infernal nukes constantly at risk of an emergency shutdown place the grid stability at such risk.

The non-pollution sourced electricity for NY can be arranged into hydro, pumped hydro, wind, landfill gas and refuse (trash), though that latter category is somewhat controversial (but, no dollars are exported to buy the raw material). Landfill gas is, in many ways, also a form of trash burning. The numbers, in terms of average MW, are:

Hydro: .................................... 2759.4

Pumped Hydro ....................... 91.4

Wind Turbines ........................ 289.1

Trash burners ......................... 216.1

Landfill gas ............................ 90.6

Wood/biomass ....................... 36.0

Total ........................................ 3482.6

This works out to be about 21.9% of NY's generated electricity, or about 19% of the total electricity used.

The hydro generation is what distinguishes NY State from many midwest/Appalachian states (in contrast, more than 95% of Michigan's electricity is now pollution sourced, and most of that is coal). But, wind turbines are now the number 2 source of renewable homegrown electricity. Unfortunately, there is little prospect for any increase in that as long as our pricing system is warped so significantly in favor of old, paid off generation sources in general and pollution based, rapid pay-back systems favoring natural gas in particular. And while NYSERDA, the state agency charged with expanding the renewable share of NY's electricity mix, certainly tries hard, it cannot overcome the "Pollution Prejudice" that is a part of the present NYISO pricing system in conjunction with the depressed electricity prices that are a consequence of The Great Recession that presently plagues NY State.

The performance of NY's wind farms is also not good, or at least not what was hoped for and/or promised. The present capacity (less the recently installed Hardscrabble and Geneva wind turbine projects) is 1276.3 MW; with an average output of 289.1 MW, this gives an average of only 22.65%. The best performing wind farm is the Munnsville one (28%), followed closely by the Steelwinds (27.55%) array, and the worst one is the Madison County one (inappropriate Vestas V66 turbines at 17.7%). Most of the wind turbines in NY are the GE 1.5sl units, Clipper C-96's or Vestas V82's, which are designed for moderate to fast wind speeds. In the U.S., the average utilization is near 35%, but this may be a consequence of the fast wind speed resources in the midwest and Texas. If the average output of the Munnsville units were replicated statewide, wind turbine output would average near 357 MW.

Given the similar wind resource and similar turbines (80 meter hub height, a power ratio of about 3.1 square meters per kw of capacity), three observations seem apparent. One is that there may not be enough space in between each turbine, and their is too much "wind stealing" in the wind farms. Another may be that the up-time of the turbines in NY is not as good as it is in the midwest, and that the owners are scrimping on maintenance, due to the poor economics of wind turbines in NY at present. Finally, these types of wind turbines are not well suited to NY winds - instead, we need what are called "Low Wind Speed Turbines" installed on taller towers. NY is neither flat nor a desert/semi-desert, and there are a lot of surface obstructions to the flow of wind - notably trees, hills and buildings. Such turbines are now commercially available, and have a power ratio of more than 4 square meters per kilowatt (m^2/kw) of capacity, and towers up to 120 meters are now available.

Any future wind turbines installed in NY will have to focus on increasing the net output of those turbines, which are only getting about 66% to 75% of the money flow from sales of electricity that they should be getting. And odds are, taller turbines will be needed to tap the faster and less turbulent winds that exist at 100 meter and 120 meter hub heights versus 80 meter hub heights. The winds present at the 40 to 80 meter heights are probably more degraded by surface roughness, so so an unacceptably large fraction of the blade rotation circle is not providing sufficiently energetic winds to produce electricity.

Of course, none of this is too relevant with today's ultra-low electricity pricing, which provides close to or less than zero motivation to install new wind turbines. In general, taller towers cost money (about $500,000 for an extra 20 meters of height using steel tower sections), which adds to the price of the wind turbines. Part of the reason that the Hardscrabble wind farm was so expensive ($200 million for a 76 MW project) was the use of 100 meter towers (adding at least $17 million to the project cost). Hopefully it is worth the extra effort, as the 45 meter long blades used at the Hardscrabble array will always be at least 55 meters above the ground, and more than 80 meters above the ground for about 63% of the time. In contrast, a GE 1.5sl can be as close to the ground as 42.5 meters, and is above 80 meters only 50% of the time.

Of note: no solar PV array in NY was designed to feed significant output onto the grid, so, in effect, all PV based electricity was "on site" made and used. Anyway, it is very hard to see how 40% of NY's electricity will be sourced renewably by 2015 or 2020. It looks like the present situation will be about all that is installed for several years, until electricity prices rise significantly, so the "15 x 15" or "25 x 15" or "40 x 15" plans will ever come close to being filled. Bummer. Time for some sensible pricing policies for renewable electricity.....

Angella Merkel's "Come to Jesus" Moment with Nukes

2011-05-13T14:29:00.004-04:00

Introduction
Angela Merkel is the Prime Minister of Germany, and also a quantum chemist by trade. One of the tools of the trade in that field is probabilities - for example, what is the probability of going from one quantum state to another (used to design photovoltaics, LED's, fluorescent lighting and MRI's, for example). She would be no stranger to statistics - how to use and abuse them. She is also quite aware of many of the details of nuclear energy/nuclear fission, too. And also how CO2 induced global temperature and climate changes happen, as well as what would be the effect of rising ocean levels on the lowland areas of Germany (a lot of prime agricultural area in the northern part of Germany is very close to sea level in altitude).

Until recently, she was a strong proponent of nuclear energy as a way to provide acceptable cost electricity without CO2 pollution. But after she saw the first hydrogen gas explosion at the Fukushima reactor complex, well, that was a "Come to Jesus" moment for her. You can read more about this at http://www.energybulletin.net/stories/2011-05-09/germany’s-unlikely-champion-radical-green-energy-path. And the result is that a very conservative leader of Germany will now be leading her country to a renewable energy future in a way that no other major country can match.

Oh well, it also helps to have a Renewable Energy Feed-In Law in place. That is the secret of Germany's renewable energy success to date, and how it can realistically replace all nuclear sourced electricity (now about 20% of the country's electricity) in less than 10 years.

And, attention NY State politicians: you could do this, too, but you need a sensible renewable electricity energy pricing system(s), something which does NOT exist in NY at the present time. No Feed-In Law (at best) or Quebec style Power Purchase Agreements with NYPA and LIPA (second best option) means effectively no significant new installations of electricity in NY State - it's that simple.

Discussion
Up until the partial core meltdowns (3 reactors, including a reactor vessel melt-through of the 6" thick pressure vessel for Unit 1) and the problems in four spent fuel rod storage pools, Ms. Merkel had been supporting the nuclear revival in Germany, much to the dismay of environmentalists, renewable energy advocates and the renewable energy industry. To facilitate new nukes, some massive subsidies would be needed for them, and she was prepared to deliver those subsidies. She was also prepared to allow old reactors to get "life extensions", including ones with the same design as the Fukushima ones (GE boiling water reactors (BWR's) made in the 1970's). After all, no CO2 is produced in the nuclear fission reaction, and total CO2 emissions via nukes are around 60gm CO2/kw-hr of electricity, about 15 times less than for coal and about 8 times less than for natural gas (which almost always has to be imported, too, requiring exports of money). Global Climate Change will not be kind to Germany, as significant parts (especially northern parts) will be flooded out with the Greenland icesheets as well as glaciers on the Alps melt/decompose.

The quoted odds of a partial core meltdown were listed as something like less than one chance in 100,000 reactor-years for BWR's. With approximately 438 reactors operating worldwide, that would be one "oops" per 228 years, assuming the current number are kept constant, and supposedly newer ones are even less prone to an "oops" than the older ones. The Soviet accident at Chernobyl was explained away as sloppy operations/primitive Soviet design, and unlikely to occur in the west (Three Mile Island was cited as an example of a success in the face of an "oops", since only the reactor was damaged, and not too much radioactive material escaped (at least compared to Chernobyl, anyway) - officially, that is).

But then came not one but THREE reactor core meltdowns, and THREE massive hydrogen (which was made by reaction of the red hot zirconium clad fuel rods with steam) gas explosions in Units 1, 2 and 3. Well, it was pretty obvious that once in 100,000 or one in a million reactor-years statistic was just a lie, or to put it kindly,"an overestimation of safety and security". In fact, that statistic implies a Gaussian (bell curve) probability/predictability of a partial core meltdown, but this is just completely inappropriate, as continuous probability distributions are inapplicable in this case. These are nuke disasters are "Black Swan events" (see http://www.fooledbyrandomness.com/TAS.pdf), unpredictable, but even worse, known to occur far more frequently than is deemed socially acceptable in Germany. Japan is a technologically advanced country, and if it could happen there, it can happen anywhere, including Germany.

Maybe this decision is all political; if you support nukes in Germany these days, you will be kicked out of office, as there is no significant public support for nukes. And in spite of all the money than many German companies want to make on designing, constructing and making parts for them, that is now irrelevant. And we are talking big money with regards to making and operating new nukes, lots of jobs (about 100,000 job-years per 1 GW reactor in direct jobs) in a country hurting for jobs and lots of bank financing fees for each nuke, plus all that avoided natural gas and coal purchase from abroad which the German government also considers as important.

So, the three least safe (oldest) BWR units were shut, and will never be restarted. Four more were stopped and are now being thoroughly inspected and also may never start up again. Now plans to install new reactors are scrapped, and all reactors in Germany will be shut down as of 2021. Germany was getting 20% of its electricity from nukes, and this electricity is to be replaced by.... renewable energy. How's that for a bold promise?

And by U.S. standards, the renewable energy potential of Germany, aside form the North Sea, is pathetic. Wimpy solar potential, and mostly very sub-standard wind resources, a location averaging at the 45 to 50 degree latitude, not much of a growing season and densely populated, too. Any renewable energy they make would most likely be more expensive than that which could be made in the U.S. But no matter, this is the path they are on. And they have a "secret" asset (at least to almost all U.S. politicians, who seem pretty brain dead when it comes to renewable energy pricing systems and what makes renewable energy implementation possible) which will more than overcome the U.S. wind, solar and biomass potential - they have sensible renewable energy pricing.

So, they will use ingenuity to enhance the efficiency of wind turbines -0 things like taller towers (120 and 135 meters versus the 80 meter "standard" in the U.S.), more aerodynamically efficient blades (Enercon and their patented "winglets" on its blades), gearless technology, and high volume, high quality manufacturing. And they will proceed to populate the North Sea with 5 MW and larger wind turbines, in conjunction with Danish, Spanish and French companies/countries. Biomass and biogas is playing an increasing role in co-generation/electricity production, as little is going to be allowed to go to waste. Their solar photovoltaic industry has been a windfall and wonderful event for their chemical industry (that's how PV materials get made), and Germany has a major PV industry. And with their Feed-In Tariff (FIT) system, hundreds of thousands of people can now be investors and electricity producers, and this is becoming ever more popular.

The FIT system allows investors a very decent chance of making a reasonable return on an investment in a renewable energy system, because the prices German utilities are required to buy this electricity are set on a cost plus reasonable (and none too high, either) basis. But, bankers love it, because they can loan out money and lots of it with a tremendously high possibility of getting repaid. For example, a $4 million dollar wind turbine only requires a 5% ($200,000) down payment; in the U.S., a 60% equity share ($2.4 million) would be required for the same unit. The huge volume of renewable electricity has actually forced the price of polluting (nukes, coal, natural gas) down via the Merit Order Effect, making these systems less profitable (their prices are set on the marginal price system used in NY State, though during windy times, polluters actually have to PAY people to take their electricity (it gets put into pumped hydro storage, for example).

No one claims that Germany has the cheapest electricity in the world, or even in Europe, but as a result, people get really efficient with it. And it turns out for most forms of renewable (wind, biogas, biomass, offshore wind), people and companies CAN afford it. Besides, the so far 300,000 jobs and billions in wealth created by the FIT system is considered a fair trade. As for PV, this is now a major export business, too, and a major source of employment. After all, what's the use of having cheap electricity if you can't have a job to pay for this cheap (but, no money, no honey) stuff? And what happens when the natural gas or coal runs out? See
http://www.energybulletin.net/stories/2011-05-13/peak-coal-year for the coal aspect, and just ONE of the downsides of not going the renewable route. And if you have delusions of endless natural gas supplies, you need to read this: http://www.energybulletin.net/stories/2011-05-12/will-natural-gas-fuel-america-21st-century-new-report.

As for jobs, renewable energy can be a prodigious job creator, especially via a FIT system. The reason the FIT system was evolved was mostly as a JOB CREATION system for high quality manufacturing; the pollution free electricity was just the frosting on the cake, so to speak, though that situation is changing to one where the energy will now power up larger and larger amounts of the country. And once these get paid off, the price for this electricity will drop like a rock.

As an example of what can be done with sensible renewable electricity pricing, consider the Bard Gruppe, which did not exist to any extent 5 years ago - see http://www.bard-offshore.de/. Their first wind turbine model was a 5 MW (new ones are 6.25 MW) one designed for offshore only, in conjunction with their distinctive "tripile" foundation. Aside from a couple of pilot projects in some harbors, their first project is a 400 MW wind farm located in 40 meters of water almost 60 miles offshore next to the Dutch border. By now, it's over 25% complete (55 MMW now feeding into the grid, completion expected this year). The total project will cost about $1.8 billion, and then two more just like this are in the works. That is what is possible with a FIT arrangement. Meanwhile, the Cape Wind project struggles on, with financing now their major challenge, though we wish them well. But there are so many extra hoops the Cape Wind developers have to go through versus what Bard 1 had to do despite the much greater technical and construction challenge of deep water far offshore versus the shallow water close to shore project in Massachusetts.

We in America have hobbled ourselves severely, and in effect, given away the store with our crazy gambling based, tax-credit (= subsidies via avoided taxes on the super-rich investors for a project) electricity pricing system. We revel in cheap electricity with respect to the generation price, yet pay absurd costs to monopolies to distribute it; in NY, transmission, distribution and connection is more than twice as much as is the price generated electricity. Pension funds don't invest in U.S. wind offshore farms not because they don't want to but because their is not financial stability for the offshore business (or onshore, for that matter, in the U.S.), but in Europe, they sure do. We can't even put our savings to work, but are instead rewarded by gambling on commodity prices (like oil), which just raises the price of oil higher than it should be. Cute...

So, if you want to make a hundred thousand of so jobs in NY in a value added, create real wealth mode that also makes the world a better place, the best place to start is not subsidizing "public private partnerships" in industries like "pharma" that are a decade past their prime. It's as simple as getting a sensible renewable electricity pricing system, and then letting the people of NY get to work. Or is that too much to ask? Must we instead only allow subsidized industries and Wall Street Gambling to rule, to the detriment of the vast majority of our state's people?

Oh well, maybe I don't really want to know the answer to that one.... as there is not enough beer in the state to drown out the wrong answer for most but the right answer for some extremely rich, extremely predatory few. And their friends in the nuke industry, too....

DB

Education Comments & Wind Power

2011-05-06T14:31:00.006-04:00

Recently, there was an Education Town Hall in Buffalo, attended by about 400 people or so - see
http://artvoice.com/issues/v10n18/week_in_review/time_out_on_schools. Maybe you were even there...?

I read that the graduation rate for black males in Buffalo was 25% last year, and the average high school graduation rate for all Buffalo was somewhere really south of pathetic. But, it's not like there are a lot of actual employment possibilities of significance for those with only a high school diploma in much of the country these days, let alone on the Niagara Frontier. Part of this reason is that there is just no respect for those who exchange their labor for money unless this is actually non-productive work (as in FIRE (= Finance, Insurance and Real Estate) employment). Probably the same for education work, and as evidenced by Kaleida's attempt at wage and benefit give-backs to make up for their bad business decision to proceed with the Vascular Center, health care, too... but, that's a bit of a digression. So who's to blame for the pathetic high school graduation rate? Or the pathetically low probability that a college graduate this year will even be able to find a job requiring their college degree (the 2007 peak of 57% dropped to 18% in 2008, and was not much better than 20% for 2009). But, those college graduates that don't postpone jobs for grad school ARE getting jobs - the ones that in the past would have been filled by those with high school degrees. Which also helps explain why those with high school degrees only have such a high unemployment rate - they are getting bumped for minimal wage jobs by those with enhanced educational experiences.

Of course, that can't be a great motivator for getting that high school degree, since unemployed and underemployed is the same whether you are educated or not in terms of income.... And while there are lots of reasons while manufacturing has taken it in the shorts, so to speak, here is an important reason why so many families in this region no longer have viable employment: http://www.epi.org/publications/entry/heading_south_u.s.-mexico_trade_and_job_displacement_after_nafta1
And this affects all skill levels - after all, no factories means no need for engineers in production activities, and lots of college educated support people also are no longer needed (accountants, lawyers, PR, media, advertising, HR, sales, etc). So factory loss also affects the college educated crowd, and in a big way. For evidence (and a really depressing experience), check out what passes for a SUNY Buffalo "job fair" these days - pretty much restricted to mercs (mercenaries), cannon fodder (armed forces), policing, Repo (home foreclosure, repossesion of loaned items) and Pharma Sales "opportunities". Ugh... try this on for size (warning, not a happy one..) http://www.inflation.us/collegebubble.html

So far, few want to even admit the obvious.... that there is ALSO a glut of highly skilled, highly educated people in WNY. And employers in the private sector in this region seem especially incapable of using their talents, even when those employers are, in effect, extensively bribed (or incentivized, so to speak) via tax avoidance, low interest loans, cheap electricity, low interest loans, etc. And it's probably nothing personal, on an individual level most would like to be able to hire more people. And those who went to the recent meeting probably want a fix to what's wrong as evidenced by high drop-out rates and on average, poor test scores by Buffalo's high school attendees....

So, for the next education conference in Buffalo, perhaps these facts could be considered:

a) The strongest correlation between educational success and no success (= no graduation, poor grades, poor comprehension of what passes for being important knowledge, etc) is POVERTY. Minimizing poverty is the best way to improve grades and improve graduation rates. This is a well proven, and in the U.S., usually a conveniently ignored fact.

b) POVERTY is strongly correlated to employment, obviously. If you want to minimize poverty, you have to maximize employment possibilities for the unemployed/impoverished for whom a better education is supposedly intended, and/or an education for their kids..

c) Since private industry does not want to hire or is incapable of hiring sufficient numbers of people at living wages (though they will hire a select few for atrociously high wages in the executive management realm - as in Kaleida (http://wnymedia.net/the-answer-lady/2011/05/kaleida-squeezes-its-workers-for-60000000/), National Fuel Gas (abbreviated as NFG), SUNY Buffalo, UB Foundation, etc) - what to do? If they won't hire people because there is NO DEMAND for what they might make or for what services they might render, maybe other options need to be considered. Such as taxing the unproductive and stashed assets of the wealthy who own much of the corporate world and putting people to work directly. Or else taking steps to stimulate demand for useful things (and not redundant, already in existence things, like existing Universities and Hospitals) by removing some of the "speculative and gambling" tax-like arrangements that the "predator sector" (FIRE) imposes on society.

d) The motivation for educational success is significantly provided by the probability that actual employment at wages that support a middle class life is sufficiently high enough. When that probability of viable employment approaches zero for a large segment of Buffalo, well, motivating those kids to go to school, let alone getting anything of value out of school becomes more difficult than leading a non-thirsty horse to the Scajaquada Creek and trying to force them to drink that yucky water. Also, check out this: http://www.dailykos.com/story/2011/05/09/974409/-Why-Life-in-High-School-Is-More-Absurd-Than-Ever.

e) Educational success is also somewhat of a family affair - those whose parents or parental figures are educated/appreciate an education tend to do better than those whose parents perceive no value in education (just leaves you unemployed, but a lot deeper in debt). More Catch 22, and mostly curable with viable employment for the parents of the kids going to school.

f) Some horrid solutions to the "not enough jobs/too many people" scenario is to decrease the number of people, rapidly - often by war (US "Civil" War, WW1, WW2), genocide (Rwanda, Turkey/Armenia, Europe in WW2, Bosnia in the 1990's), starvation and protein deficiency (China in Great Leap Forward, North Korea), or societal insanity (the present Congo "rape-fest"/butchery zone). And there is the time honored tradition of slaughtering women by accusing them of witchcraft/health care skills - that was good for a 15 million person population readjustment in the Middle Ages (rumors are that some teabaggers have a yen for this one). But, those are horrid. The civilized way to go is hire people, ASAP, and put them to work doing things that make our country a better place, and these days, more energy sensible.

So much of what I heard in the recent Education Town Hall reporting was adults looking for a scapegoat as to why so many Buffalo children don't see any value in education (maybe the lack of scholarships to SUNY Buffalo for Buffalo high school grads is a factor? - After all, the UB Foundation and related only spends 8% of its annual expenditures on tuition for poor people - see http://wnymedia.net/the-answer-lady/2011/05/the-skim/). Maybe if we looked at the situation through the eyes of a Buffalo High Schooler - and not as employed adults, often with college degrees surrounded by other employed adults with college degrees - and saw what they saw in terms of future money income, a more educational experience might be the outcome of the next meeting. Otherwise, we will probably get another exercise in mediocrity, exemplified by US Education Secretary Arne Duncan:

http://www.dailykos.com/story/2011/05/05/973502/-A-teachers-royal-smackdown-of-Arne-Duncan

Lastly, most ways of stimulating demand and increasing employment when private industry does an impressive FAIL (as was evidenced in The Great Recession - at least a 7 million jobs lost arrangement) is what was done by the great NY Hero of the Economy Harry Hopkins (see http://en.wikipedia.org/wiki/Harry_Hopkins), and yes, this involves government deficit spending. Mr. Hopkins oversaw a massive government hiring of people in the winter of 1933 - the Keynesian Stimulus approach - and this kept a LOT of people (more than a million?) from starving and/or freezing to death, though that fate was not uncommon for poor people during those times.

BUT, there is a way to massively stimulate economic demand without government spending and bribes in the form of tax avoidance for uber-rich people, and that is in the replacement of our pollution based electricity production system (about 80% of NY's electricity is provided via polluters). All you have to do is make manufacture of green energy systems economically viable by creating a demand for them. And to do that, all that is needed is to price the product of these systems - renewable electricity - at a rate that is equal to the cost of production plus some socially defined reasonable profit/return on investment - around 5% to10%, depending on what they are. This could put some of the (so far, "only") $2 trillion in corporate stashed away cash to work, as well as the $1+ trillion in banks/"bankster organizations" like Goldman Sachs. They have NO VIABLE INVESTMENT OPPORTUNITIES for that money (and then there is a lot more from rich individuals and "Hedgies" - Hedge Funds) in the U.S. at the present time. So much for job creation by those rich people that Republicans in the House and Senate have imagined as "The Job Creators"...

So give them some viable investment opportunities, as well as the rest of us "normal people" who wish for more than 0.25% from savings accounts in banks. Take the value-less added, socially destructive and inapplicable-to-renewable-energy risk out of electricity pricing in NY State. Disconnect renewable electricity pricing from pollution sourced electricity (nukes, coal, Ngas, oil), and put it on a cost plus reasonable return basis. And if banks fail to step up to these massive investment/loan/loan income opportunities, set up a NY State Green Bank for that purpose (it will be an income stream for NY State, too). After all, when those banksters can scam stock holders, governments, consumers and other investors via front-running, swaps, commodity futures/derivatives on those bets, other rigged gambles, etc, you would think WC Fields' comment in "My Little Chickadee" applies:

"Mister, Is that a game of chance?" asks a prospective poker player.
"Not the way I play it" says Mr. Fields, ever so truthfully...

To get the job of replacing most of our pollution based energy systems done in NY State about 4 million job-years of direct employment is needed, as are $271 billion over 20 years (repaid by electricity and ex-Ngas users) - see http://wagengineering.blogspot.com/2011/04/peak-oil-and-wind-power-in-ny-for-2011.html. And then there are spin-off jobs to be had (multiplier effect). No taxes needed to fund this, and any bonds for a NY Green Bank are readily repaid using interest from loan money that comes from reliable repayments of loans based on sane pricing for renewable energy in NY State. BTW, with enhanced economic performance, tax revenues also rise.... And if you use more expensive routes to make electricity, well, that also creates more jobs (somewhere, hopefully here) manufacturing those systems.....

Or we could moan and groan about those slacker kids and what sometimes passes for adult supervision (take some extreme examples, apply it to almost all, and "mission accomplished"), ad infinitum, call in Wall St and the Hedgies for their "educational treatment" and get another education in how to get fleeced of a lot of money. But without a cure for the "leading the horse to that yucky Scajaquada Creek water" problem, there will be no perceptible improvement in graduation rates or test score performance. But hey, Wall St is close to Madison Avenue, so with the right media campaign, we can be convinced that something is happening even though the SOS mode is really occurring.

DB