I am a biased observer in the energy field. I firmly believe that atomic fission based power systems have the potential to replace fossil fuels in many applications, that fission power sources can capture market share in competitive contests, and that fission is far cleaner than the fossil fuel competition. I also will assert, based on a lot of numerical and technical analysis plus personal experience, that so called “renewable energy sources” are simply a distraction that are generally not worth the investment in time, talk and ink (virtual or real) that they have been provided.
As part of my continuing surveys of the energy landscape to keep abreast of developments that might cause me to rethink my already established position – I am willing to change my mind in the face of facts – I ran across an article with an interesting title – Swept Up by Wind – that provides some food for reflection. It certainly did not provide any reason for me to change my views about the uselessness of many wind power investments, even though it did cause me to be impressed by the numbers involved and the ability of many people to dismiss reality in an attempt to go with the flow.
Here are two paragraphs from the article that should cause anyone running financial decision spreadsheets to start digging franticly for additional information since they appear to be quite contradictory. About half-way into the article, Ken Silverstein, the editor-in-chief of Energy Biz and the author of the subject article states:
The good news is that turbines are getting better and cheaper while storage technologies to allow wind to be used during calm days are in the offing. Federal tax breaks and state mandates, meantime, are offsetting some of the initial start-up costs, although developers complain of uncertain federal tax laws.
Just a couple of paragraphs later, however, you will find the following comment.
It has all enabled more development. The demand for wind energy components such as turbines is exceeding the supplies, which has driven up costs. In time, though, manufacturers will catch up and increase their production rates. Regardless, experts say that wind is competitive with natural gas at current rates and with newer coal plants that are required to use the best available technologies.
Anyone who is a careful observer of the commodity markets knows that turbines are not the only component of wind farms whose price has increased rather substantially in the past two to three years. Concrete, steel, copper, and even the cost of renting tall cranes are all 50-100% more costly today than they were in 2005. (See, for example, Ohio Department of Transportation Steel Price Index and Washington State Department of Transportation Structural Concrete Unit Bid Price)
If turbines prices are increasing, tower prices are increasing, construction costs are increasing, and transmission system costs are increasing, how can Mr. Silverstein, along with many other casual commenters on energy markets, continue to assert that wind generated electricity is getting cheaper?
Investing in bubbles is very risky – the profits seem to get bigger at a higher rate of growth just before the market bursts. I believe that the wind energy bubble is getting close to that point – investors are going to begin realizing that project approvals are not automatic, that many of the best properties were developed first, that people are going to tire of continued subsidies and mandates, and that there are better, more reliable ways to produce emission free electricity when it is needed, where it is needed.