Five key reasons to pull plug on wind subsidies

Committee For A Constructive Tomorrow (CFACT) published an article by Larry Bell which can be viewed at this link:

Five key reasons to pull plug on wind subsidies

The five reasons are listed below, and more details for each are in the article linked above:

1. First, consider that even gargantuan wind installations covering thousands of acres generate only small amounts of unreliable power.

2. Those intermittent outputs require access to a “shadow capacity” which enables utilities to balance power grids when wind conditions aren’t optimum . . . which is most of the time. Anti-fossil energy promoters aren’t eager to mention that those “spinning reserves” (which must equal the total wind capacity) are fueled by the same sort of coal or natural gas turbines that those friendly breezes were touted to replace.

3. A major study of nearly 3,000 on-shore British wind farms found that the turbines have a very short –12- to 15-year– operating life, not the 20- to 25-year lifespans applied in politicized government and industry projections.

4. Along with high life-cycle investment and operations costs, let’s also add environmental costs to the mix. A Sierra Club official described them as giant “Cuisinarts in the sky” for bird and bat slaughters. Other local wind critics have legitimate health concerns about land-based installations. Common symptoms include headaches, nausea, sleeplessness, and ringing in ears resulting from prolonged exposure to inaudibly low “infrasound” frequencies that even penetrate walls.

5. The existence of the entire wind power industry depends upon federal subsidies.

Gone with the wind

The following article appears in the Spring 2013 issue of "Regulation", a quarterly publication from the Cato Institute.

The High Cost of Low-Value Wind Power

Subsidized wind generates the least amount of power when it is most needed.
By Jonathan A. Lesser

The entire article can be found here:

http://www.cato.org/sites/cato.org/files/serials/files/regulation/2013/3/v36n1-8.pdf

The conclusions are as follows:

Continued subsidies for wind generation, both in the form of tax credits and mandatory renewable portfolio standards (RPS), represent bad economics and bad energy policy, for at least three reasons.

First and foremost, wind generation’s production pattern is not only volatile and unpredictable, it also has low economic value. Rather than displacing high variable-cost fossil generating resources used to meet peak demand, wind generation’s availability peaks when electricity demand is lowest. As a result, wind generation tends to displace low variable cost generation or simply forces baseload generators to pay greater amounts to inject power onto the grid because the units cannot be turned off and on cost-effectively. Thus, consumers and taxpayers are forced to subsidize low-value electricity.

Second, subsidized wind generation, like all subsidies, distorts electricity markets by artificially lowering electricity prices in the short run, but leads to higher prices in the long run. This imposes economic harm on competitive generators and consumers. Subsidies drive out competitors and increase financial uncertainty, thus raising the cost of capital for new investment in generation. In the long run, the impact of subsidies is electricity prices that are higher than what would prevail in a fully competitive market.

Third, subsidized wind generation results in additional social costs that are borne by consumers. Those costs include billions of dollars that must be spend on additional high-voltage transmission lines, which have their own adverse societal impacts, as well as additional costs that are incurred to integrate variable and intermittent wind generation onto the grid. In other words, wind generation imposes external costs on other market participants.

After 35 years of direct and indirect subsidies, there is no economic rationale for continued subsidization of wind generation. At the federal level, direct subsidies such as the federal production tax credit (PTC) should be ended immediately. Similarly, state-level subsidies, whether feed-in tariffs established by state regulators or statutory renewable portfolio standards (RPS) mandates, exacerbate market distortions and raise electricity prices, again to the detriment of consumers. These state subsidies should also be eliminated. Ultimately, continued subsidization of wind generation simply rewards a few niche generation companies and their suppliers, at the expense of the many. Given the massive federal debt and anemic U.S. economic recovery, this type of pernicious wealth redistribution cannot be justified.

The law of supply and demand has been repealed!

On 3/21/12 The Associated Press published this article:

FACT CHECK: More US drilling didn't drop gas price

The article refers to statistical studies done by university professors.  These studies conclude that during periods when the US has increased domestic drilling gasoline prices did not decline.

It would be intuitively obvious to the casual observer that oil exploration drilling (domestic or international) will only increase during times of rising oil prices.  Would it make economic sense to explore for new oil fields when  oil prices were declining?  Therefore it is to be expected that oil drilling will increase when oil prices increase.  And it is also to be expected that statistical analysis of historical data would show a correlation between increased drilling and rising gasoline prices.  But, you cannot infer from this data that there is no correlation between increased drilling and a subsequent reduction in gasoline prices (or a moderation in the subsequent increase in gasoline prices).

How can anyone seriously make a claim that an increase in the supply of oil will not reduce the price of oil?  Contrary to the underlying conclusion of this article the law of supply and demand has not been repealed.  The largest single expansion in worldwide oil production occurred after the Islamic revolution in Iran interrupted oil production.  The spike in oil prices in late 1979 caused an unprecedented increase in oil exploration.  The North Sea oil field was one of the discoveries from this exploration.  When the North Sea oil along with other new discoveries entered the market the price of oil plummeted.

This Associated Press article will no doubt be cited by many businesses in the alternative energy industry as another reason that they should receive taxpayer subsidies.  This article is deceptive and should be exposed as such to the general public.

Subsidies for the politically connected

The following article by Robert Bryce discusses corn based ethanol and plug in electric vehicles:

http://www.energytribune.com/articles.cfm?aid=2485

The following paragraphs explain how the “Green Movement” works:

• Then again, the entire electric car push may just be another over-hyped flavor-of-the-month whose main effect will be the transfer of billions of dollars from the pockets of taxpayers to the coffers of politically favored industries that have effective lobbyists in Washington.
• Among the most notable recipients of the government’s largesse: Fisker Automotive. In September 2009, Fisker received a $529 million loan from the US government to help finance its startup costs. One of Fisker’s main financial backers is the venture capital firm Kleiner Perkins Caufield & Byers, a Silicon Valley firm where Al Gore is a partner.

If a thorough audit of any Government subsidy to industry is carried out you will find some type of unsavory relationship. There will always be someone who can benefit from convincing the Government that their industry is promoting the “common good”. Government should never fund private enterprise.

"Is that about the coolest thing you've ever heard?"

Where is another example of why the Federal Government should never be allowed to spend our money. This is a story from the Wall Street Journal published on 10/17/09:

http://online.wsj.com/article/SB10001424052748704107204574473724099542430.html

The details of this fiasco would once again be funny if not for the fact that we are paying for this nonsense:

• 
  We thought cash for clunkers was the ultimate waste of taxpayer money, but as usual we were too optimistic. Thanks to the federal tax credit to buy high-mileage cars that was part of President Obama's stimulus plan, Uncle Sam is now paying Americans to buy that great necessity of modern life, the golf cart.
• The federal credit provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart. Even in states that don't have their own tax rebate plans, the federal credit is generous enough to pay for half or even two-thirds of the average sticker price of a cart, which is typically in the range of $8,000 to $10,000. "The purchase of some models could be absolutely free," Roger Gaddis of Ada Electric Cars in Oklahoma said earlier this year. "Is that about the coolest thing you've ever heard?"
• The golf-cart boom has followed an IRS ruling that golf carts qualify for the electric-car credit as long as they are also road worthy. These qualifying golf carts are essentially the same as normal golf carts save for adding some safety features, such as side and rearview mirrors and three-point seat belts. They typically can go 15 to 25 miles per hour.
• This golf-cart fiasco perfectly illustrates tax policy in the age of Obama, when politicians dole out credits and loopholes for everything from plug-in cars to fuel efficient appliances, home insulation and vitamins. Democrats then insist that to pay for these absurdities they have no choice but to raise tax rates on other things—like work and investment—that aren't politically in vogue. If this keeps up, it'll soon make more sense to retire and play golf than work for living.

It is easy to attribute this policy to “unintended consequences” from a large federal spending program. I think that some research would lead to a different conclusion. I believe that the wording of this federal law was intentionally vague so that those who were positioned to gain from the sale of these vehicles would directly benefit from this legislation.
Imagine the “unintended consequences” that have been inserted into the 1,500 page health care legislation.

How Wishful Thinkers Are Forced To Reconnect With Energy Reality

The following article was published on 9/10/09 on the Investors.com website:

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=505738

This article lists several examples of governments saying one thing and then doing exactly the opposite when reality sets in. Here are a few of the best examples:

• One day Energy Secretary Ed Milliband sets out his proposed expansion of the U.K.'s wind power-led alternative energy revolution; the next day, Vestas, the U.K.'s largest wind turbine manufacturer, shuts down a big part of its British operations citing "low demand" and public opposition to onshore wind farms.
• In 2006, Germany's Angela Merkel was hailed as the "Green Chancellor" for promising to rid her country of coal and nuclear power in its bid to give a clean energy "world lead." Three years on and Merkel's government actively supports the construction of a new generation of 26 coal-fired power plants as well as keeping Germany's nuclear power stations open.
• "Capitalism and consumerism have brought the world to the brink of economic and environmental collapse," the U.K.'s Prince of Wales ruminates, adding that "the age of convenience is over." As international columnist Mark Steyn comments, "The Prince then got in his limo and was driven to his other palace."
• As we have seen, however, national leaders will ultimately refuse to impoverish their industries even to "save the planet." The still-"disconnected" flower-power generation and its idealistic offspring would do well to grasp that the energy future is not green. It is hydrocarbon, and will continue to be for another century at least.

Scientifically Illiterate and Innumerate

The following article by Robert Bryce examines the question: why are Americans so easily swayed by politicians and others when it comes to energy matters?

http://www.energytribune.com/articles.cfm?aid=2210

The answer to this question is unsettling:

• A 2007 study by Michigan State University determined that just 28 percent of American adults could be considered scientifically literate.
  
• Indeed, while most moderately cultured people will be familiar with the Bard’s A Comedy of Errors or The Merchant of Venice, the laws of thermodynamics -- the rules that ruthlessly police the world of energy -- are considered by most people to be the domain of nerds and wonks. Thus, the first law of thermodynamics: energy is neither created nor destroyed; and the second law: energy tends to become more random and less available -- are relegated to the realm of too much information. For most people, basic physics is seen as nerdy, beyond their ken, too troublesome to learn.

We are quickly losing the ability to understand the physical world around us along with the technology that we employ each day to function in our modern society. Science and math are the pathways to future advancement. We must encourage our young students to study these fundamental fields.

hydrogen fuel cell vehicles

Even the US Department of Energy admits that hydrogen fuel cells will not be a viable option for powering vehicles at any time in the foreseeable future:


http://news.cnet.com/8301-11128_3-10236740-54.html?part=rss&tag=feed&subj=GreenTech

Sensible Drilling: Gone With the Wind?

A recent article in Barrons questions the policies of Interior Secretary Ken Salazar:

http://online.barrons.com/article/SB123940740006410093.html

lots of wind

Our Interior Secretary Ken Salazar has a vision for energy generation that would require an amendment to the laws of physics.

http://www.google.com/hostednews/ap/article/ALeqM5hYPThxv2IqnjxnLF7V9Omy7dmjCAD97D6NB80

“Windmills off the East Coast could generate enough electricity to replace most, if not all, the coal-fired power plants in the United States, Interior Secretary Ken Salazar said Monday.”

Solar, wind, wave, and tidal power generation all obtain power from intermittent sources. Solar produces no power on cloudy/rainy days or at night. If there is low wind or excessively high wind then no power is generated from wind turbines. Wave and tidal power does not generate power when seas are calm. Therefore all power that is generated from intermittent sources requires a backup generator of equal capacity that can be quickly brought online to meet power needs when the intermittent source goes offline. Currently and for the foreseeable future the backup generation capacity will be powered by fossil fuel (mostly coal).

When considering adding new generating capacity to a power grid, this required duplication of generating capacity will always make the intermittent source of alternative energy generation economically uncompetitive compared to energy generated by fossil fuel. The fuel costs saved when the system is running on solar, wind, or wave power will not cover the additional expense of construction and maintenance of the backup fossil fuel generators along with the cost of construction and maintenance of the intermittent alternative energy source.

In addition to the required duplication of generating capacity, the cost and complexity of transmitting electricity from far offshore wind turbines is a significant obstacle to this type of project ever becoming a reality.

I find it unlikely that the Interior Secretary would not be informed of these limitations. If he is intentionally promoting offshore wind power with the knowledge that it will never be cost effective then he is preparing a plan to force this policy upon the marketplace through regulation and government decree.

the color of money

It looks like “green energy” is providing a new avenue for our politicians to funnel taxpayer money to friends and family. The following article describes the City of Chicago’s purchase of carbon credits:

http://www.chicagotribune.com/news/local/chi-daley-green-power-bd22-mar22,0,6177898.story

Based on the details in the above article it is obvious that Chicago is sending money to a producer of electricity in another state and receiving nothing in return. I have not researched this transaction but based on my knowledge of Chicago politics I would expect to find that the trader that handles these transactions and the utility that ultimately is receiving the money are somehow connected to local Chicago politicians.

This is a small example of what to expect from our federal government’s proposed “cap and trade” system.

Los Angeles has corrupt politicians too

One of my friends pointed out to me that Chicago does not have a monopoly on corruption. He forwarded me the following news article:

http://online.wsj.com/article/SB123682571772404053.html

Lets follow the money flow in the above story.

1. Ms. Waters and her husband, Sidney Williams, were investors in two African-American owned California banks that merged with other lenders in 2002 to form OneUnited. Congressional financial-disclosure forms show Ms. Waters acquired OneUnited stock worth between $250,000 and $500,000 in March 2004, as did Mr. Williams. Mr. Williams joined the board of OneUnited that year.

2. Mr. Williams also received interest payments from a separate holding at the bank, also worth between $250,000 and $500,000.

3. OneUnited's executives have donated $12,500 to Ms. Waters's election campaigns.

4. In January, Ms. Waters acknowledged she made a call to the Treasury on OneUnited's behalf. The bank's capital, which was heavily invested in shares of Fannie Mae and Freddie Mac, was all but wiped out with the federal takeover of the two mortgage giants, and the bank was seeking help from regulators.

5. OneUnited eventually secured bailout funds under the government's $700 billion Troubled Asset Relief Program.

Maxine Waters as a member the House Financial Services Committee, helped create federal lending laws and regulations that allowed Fannie Mae and Freddie Mac to dominate the home mortgage industry. At the same time OneUnited a bank in which she is a major stockholder - and that her husband is a director of - was building its investment position in Fannie Mae and Freddie Mac. Part of the dividends and capital gains that OneUnited Bank earned from investments in Fannie Mae and Freddie Mac are paid to Maxine Waters as dividends and capital gains from her stockholdings in OneUnited Bank. Her husband also collects dividends, capital gains and interest from OneUnited Bank. She also collects campaign contributions from OneUnited's executives and the source of these contributions are the proceeds of the Fannie Mae and Freddie Mac investments. Now that Fannie Mae and Freddie Mac have collapsed Maxine Waters will collect from the TARP payments too.

In case you missed the last paragraph in the news article I will repeat it below:

In October, regulators demanded that OneUnited raise fresh capital and name an independent board. The bank was ordered to stop paying for a Porsche used by one of its executives and its chairman's $6.4 million beachfront home in Pacific Palisades, Calif., a luxury enclave between Malibu and Santa Monica.

By the way, Maxine Waters is not only an expert on banking she is also an authority on the subject of energy production as you will see in the following video:

http://www.youtube.com/watch?v=PUaY3LhJ-IQ

coal, congress, and your money

Here is a news article on a subject that I find of great interest.

http://hosted.ap.org/dynamic/stories/C/CONGRESS_POWER_PLANT?SITE=OHWIL&SECTION=HOME&TEMPLATE=DEFAULT

This story has many interesting details but I find the section below most significant:

Recognizing this dead end, just last week House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., wrote the Architect of the Capitol with another recycled idea: convert the plant entirely to natural gas.

While four times more expensive than coal, natural gas produces about half as much carbon dioxide.

Referring to the facility as a shadow hanging over efforts to make Congress more environmentally friendly, the leaders said the conversion would demonstrate Congress' willingness to deal with global warming, energy independence and the use of finite fossil fuels.

According to this story Congress is willing to spend 4 times more for fuel by switching to natural gas. Also in the last sentence we learn that Congress is considering solving the problem of using a finite fossil fuel by switching from coal the fossil fuel that is most abundant to natural gas another fossil fuel which has a much lower quantity of known reserves.