Growing Alliance Between Renewable Energy Industry, Natural Gas Industry, Big Banks, and Political Supporters
Michael Eckhart, President of the American Council of Renewable Energy (ACORE), visited with Bill Loveless on Platts Energy Week on December 19, 2010. He was invited to lay out his industry’s proposal to change electric power grid rules to favor power plants that are a hybrid of unreliable, weather dependent energy sources like wind and solar along with “dispatchable” natural gas fired power.
Aside: I put dispatchable in quotes because Ekhart talked about combined cycle gas turbine power plants as being his preferred partner in this endeavor; from an engineering point of view, those plants are not much easier to vary up and down than large supercritical coal fired steam plants or very large light water reactors. The kind of gas plants that are most often used to balance highly variable power sources are fairly small, simple cycle, relatively inefficient gas burners. The Electric Power Research Institute is working on ways to change that technology limitation, but they have a long way to go before plants that are optimized for high efficiency can be used as load balancers for unreliable power sources.End Aside.
When you watch this interview, pay close attention to Eckhart’s description of the competition between various sources of electrical power and to the partners (natural gas industry, banks, etc.) that benefit from his vision. Then take a hard look at the gift from taxpayers that helps to make it all possible – the section 1603 cash grant program that provides developers of politically correct “renewable” energy systems a direct payment of 30% of their project cost as a grant from the federal treasury.
Aside: Regular readers of Atomic Insights might recall Michael Eckhart as the man who rudely grabbed the microphone at a conference in August 2010 to declare that nuclear energy, even if it is based on converting what is now considered to be waste into useful fuel, could never be called “renewable”. End Aside.
In the last minute rush to pass a stimulating tax bill before the holiday break, the renewable energy and natural gas coalition was able to convince lame duck legislators to include a one year extension of the amazingly generous 30%-of-project-cost cash gift that helps to build wealth (Eckhart’s word) for renewable energy entrepreneurs who are backed by venture capital. In just the past two years, that program has cost taxpayers $5.5 billion, enough to pay 100,000 people $55,000 for a year.
In addition to that more visible expenditure of funds, the recently signed bill allows renewable projects to expense the entire capital cost of their project as a tax write off. Amazingly enough, the amount of that write off includes half of the amount of the cash grant.
Suppose a project costs $1 billion. The developer gets a check from taxpayers for $300 million. Taxpayers also pay for any credit subsidy cost associated with a guaranteed government loan. The developer can then take a deduction of $850 million in the first year of operation. At current corporate tax rates, that deduction is worth another $330 million.
No wonder renewable project developers do not really care that their projects do not generate much electricity that can be sold for a profit. No wonder there are some temporary jobs associated with the renewable energy industry that will disappear as soon as the payments disappear – as they inevitably will. No wonder there is a reluctance on the part of nuclear project developers to pay credit subsidy costs that approach one billion dollars for a single reactor project that does not qualify for any of the renewable energy gifts and that will not be able to benefit from the expensing provision because they still have several years worth of licensing activities to complete before they can begin purchasing equipment.
Since the tax and grant favored renewable energy systems will only operate for about 20-40% of the time and that operation cannot be scheduled to coincide with peaks in demand, no wonder the natural gas industry was more than happy to help apply the necessary political pressure.
I hope you can understand why I am so livid and staying up late at night again. I think that people like Eckhart are the real problem in America today – rich and politically powerful people who are becoming even more wealthy by flimflamming the American taxpayers.
Cheap energy is in the interest of humanity, but not of those who currently serve on expensive energy or to tax them as here in Europe. A friend of mine knew Alvin Weinberg and at one of their last meetings, “said Alvin.
I have been an advisor to seven presidents, no one wants to have reliable, inexpensive energy.
The West suffers from special interests dictatorship. My hope is in India and China’s enormous needs, not even nuclear GenIII can do it, only a closed fuel cycle can be capable of producing 4-5 times as much energy as today.
Actually today’s unholy alliance would be negative if Spectrolabs solar cells with 40% efficiency will cost $ 1 / Wp and molecular thermal energy storage with less expensive materials than ruthenium
http://gunnarlittmarck.blogspot.com/2010/10/termisk-energilagring.html
Manufactured, they do not want that energy should be cheap and free for anyone to create.
Sol and wind is okay as long as it is to expensive… wind will always be to expensive.
I think how ever that Spectrolab
@Gunnar – good luck to you. I find it rather far fetched to think that any solar based system will ever be a source of reliable, low cost energy. Even if solar cells were free and 100% efficient, you still have that issue of the sun being 93 million miles away and often shaded by our planet’s rotation. Satellites do not solve that issue – you just add the troubling challenges of both getting the satellite into orbit and then delivering the power back down to earth.
No, the low cost, abundant energy is right here on earth. We will move to close the fuel cycle gradually, as necessary. Until that point is reached, once through commercial nuclear fuel using just 0.5% of the potential energy is still available for about 1/8th the cost per unit heat as “cheap” natural gas. Most importantly, that is a complete fuel cycle cost, not just the cost of getting the fuel out of the ground and ignoring the waste storage challenge.
I thnk Gunnar is refering to Spectrolabs (a part of Boeing) concentrating solar cells being used on earth, not up in space. http://www.solar-pv-management.com/solar_news_full.php?id=73563
What’s a “Wp”? I’m not familiar with that unit. I presume the W is for Watt, but what’s the ‘p’ for?
Jeff, perhaps it’s Watt (peak) as oppose to Watt (average).
Solar panel prices could become irrelevant if they reduce below $1/W. With current processes, the incremental cost of panels is already less than the cost of installation and support, so much cheaper panels wouldn’t make that much difference.
@ Rod, If you put a solar power satellite at geosynchronous orbit, due to the Sun-Earth geometry, the satellite will spend very little time in the Earth’s shadow. There’s an anual cycle of the efficiency due to the variation in our orbital distance, then in Feb-Mar and Sep-Oct there’s a time when the satellite will spend a up to 70 minutes in the shade at the peak of the shadow periods. If we ever did build giant space-based power systems, it will probably be done with material mined from the moon or a nearby asteroid. Of course by then we may have a space elevator with the pace of development of materials such as carbon nanotubes.
And along with all this, a “Mr Fusion” device to power everything. The problem with space based solar is that once we can do it cost effectively, we probably won’t need to.
I am optimistic by nature and feel the recent election will have consequences for this kind of insomnia-causing crony unicornism.
Rod – I am glad that you underlined the load following issues with combined cycle gas plants. I am getting a bit fed up of people extending opinions about how the power system works from a perspective of total ignorance of the limitations of the various elements. People used to throwing a switch in their homes to turn on a light, or twist a knob to light their gas stoves have no idea whatsoever what is to control and traffic in these things at the magnitudes required to produce and distribute them to a large market.
Rod Adams wrote:
In addition to that more visible expenditure of funds, the recently signed bill allows renewable projects to expense the entire capital cost of their project as a tax write off. Amazingly enough, the amount of that write off includes half of the amount of the cash grant.
Suppose a project costs $1 billion. The developer gets a check from taxpayers for $300 million. Taxpayers also pay for any credit subsidy cost associated with a guaranteed government loan. The developer can then take a deduction of $850 million in the first year of operation. At current corporate tax rates, that deduction is worth another $330 million.
Methinks that if such favorable terms were offered to the nuclear energy industry, companies would be falling all over each other to build new nuclear power plants.
@donb: Methinks that if such favorable terms were offered to the nuclear energy industry, the coal and gas industry, along with their anti-nuke “Public Interest” groups and “Taxpayers Against Waste” type groups would be on every TV news program and radio talk show decrying such a subsidy, and claiming to all that if an industry can’t succeed on it’s own merits, it shouldn’t fall to the taxpayers to make it succeed with huge subsidies.
The subsidies ended with Shippingport, the first “commercial” reactor, which in reality, was a ruse to help disguise the true cost of the military applications of nuclear power.
Today the nuclear power industry covers the complete cost (The entire budget, less token payments by university research reactors and less than equitable NPP subsidized fees for “medical” radiation sources) of the Nuclear Regulatory Commission. Any fines are on top of the fees paid Annual license fees start at around $3 million for each reactor.
Airplane “license” fees are $5.00 every 5 years (regardless of plane size or use). They just changed it to every 3 years though, big increase!
What is the fee the coal burners pay to the EPA? What is the fee the Chemical, paper, steel, etc. plants pay to the EPA?
Who is really subsidizing who?
What we need to do is to make people view politicians who take fossil fuel money in the same light as they do politicians who take mob money.
Sent an email to LaTonya Miller, assistant to Sen. Lamar Alexander, referencing Rod’s article. Given the new Congress, let’s see if he’s ready to try to shake things up.
LaTonya_Miller@alexander.senate.gov