Sen. Lamar Alexander calls Cape Wind's Offshore Project "A Taxpayer Ripoff"
Senator Lamar Alexander is one of the more energy literate members of the United States Senate. He was recently quoted in a Knoxnews.com article titled Alexander calls Mass. offshore wind farm ‘a taxpayer rip-off’ as saying the following about the Jim Gordon led project to build a 130 turbine, 468 MWe (max output) wind farm in Nantucket Sound.
“It’s a taxpayer rip-off,” the Maryville Republican said. “It creates a puny amount of very expensive electricity. Taxpayers in Tennessee will be paying extra for it because of the taxpayer subsidies. And it will destroy a very beautiful Nantucket Sound.”
There are numbers that can be used to quantify the “very expensive” description. According to the power purchase agreement that Cape Wind and National Grid have signed, National Grid will be purchasing 50% of the output of the wind farm. Starting in 2013, National Grid will be paying $207 per megawatt-hour. That price will increase by 3.5% per year for 15 years, so the electricity will cost $335 per megawatt-hour by 2028.
According to the New England Independent System Operator (ISO) the wholesale price of electricity at peak demand varied from $45 to $90 per megawatt-hour for the period between April 2009 and April 2010. Paying $207 for a product that is otherwise selling for less than $90 seems illogical. But wait, there’s more. That price is conditional upon Cape Wind qualifying for the full set of federal and state subsidies that are currently available. If the project gets delayed a bit and the federal subsidy is not extended once more, the price of the electricity for National Grid will increase by at least $21 per megawatt-hour to make up for the loss of direct taxpayer support.
In addition, the electricity that will be supplied by the Cape Wind project is less valuable than the stable electricity from a reliable, controllable source. It comes into the grid at the whim of the wind; if the wind speed drops to half of its previous velocity, the power falls by a factor of eight. If the wind velocity cranks up, system operators must take aggressive action to ensure that the grid frequency and voltage remain stable and do not harm any of the millions of devices that are plugged in. The topic is way too complex to cover here, but for those with some electrical knowledge, I will also mention that controlling reactive currents is significantly more challenging in an area with a high concentration of wind power.
The Cape Wind project might also turn Nantucket into one of those locations where there is a large wind installation with a limited capability to move the power elsewhere. In those locations – some parts of Europe and western Texas – the grid operators actually pay people to turn on electrical loads when the wind is blowing hard to try to absorb the excess power. Of course, when the wind dies down, the good deal disappears and the real cost of operating the grid has to be collected from other customers and taxpayers.
Of course, the people who operate National Grid and supply electricity to millions of customers are smart enough about electricity to have figured all of the above out on their own. One might ask – “then why did they sign the power purchase agreement?” The first part of the answer is that they are subject to a law that requires a certain portion of their power be chosen from a list of approved “renewable” energy supply choices. The second part of the answer is that their monopoly supplier status allows them to pass the cost of the purchase to their customers. The news reports and press releases minimize the impact of that cost with statements like the following:
The utility projected a monthly bill increase of $1.59 for a typical residential customer in the first year through the deal.
What they do not do is show how the cost will affect customers who are not quite typical residential customers. It would be interesting to find out what the potential cost will be for small businesses, commercial property owners, and large, industrial enterprises – if there are any left in Massachusetts.
Additional Reading
Fast Company profile of Jim Gordon and Cape Wind (July 2007) – Jim Gordon May Have an Answer to our Energy Problems
“The utility projected a monthly bill increase of $1.59 for a typical residential customer in the first year through the deal.”
Diffuse harm and concentrated benefits.
The beneficiaries are few and get the $1.59 aggregated over many individuals and they will fight vigorously to recieve it. Those who pay the extra $1.59 without seeing any benefit don’t have much of an incentive to care; it’s only 10-15 minutes of labour at the minimum wage; if they object at all they do so on principle or when a sufficient number of wind-farms pile up that they begin to feel it.
Wind farms and nuke plants have a common traits: High capital cost and offsetting the use of natural gas. Incentives for both will benefit all tax payers by reducing the cost of NG. Wind reduces the NG that peaking plants use and nukes offset base load NG.
Wind would offset peaking NG plants only if the wind speed matched the electricity demand peaks, which is unlikely.
You haven’t read these:
Wind does not significantly reduce CO2 emissions:
http://www.masterresource.org/2009/11/wind-integration-incremental-emissions-from-back-up-generation-cycling-part-i-a-framework-and-calculator/
Emissions INCREASE, due to Wind Energy in Colorado:
http://ipams.org/wp-content/uploads/BENTEKStudy_How_Less_Became_More.pdf
Peter Lang shows that the CO2 AVOIDANCE COSTS OF WIND, including necessary backup are $830 to $1149 per tonne CO2 avoided, vs Nuclear at $22 per tonne CO2 avoided, compared with a standard Black Coal Power plant:
http://www.wind-watch.org/documents/wp-content/uploads/lang-wind-power-co2-emissions.pdf
#1 Wind Energy country, Denmark has the highest power rates in Europe and produces the highest CO2 emissions of 881 gm CO2 per kwh of electricity, #2 Wind Power Germany produces 601 gm CO2 per kwh, while Nuclear France produces 83 gm CO2 per kwh.
Kit – “Wind reduces the NG that peaking plants use and nukes offset base load NG.” That is like the electric company saying that an electric heater in my office will reduce the amount of NG used to heat the house and lowwer my gas bill. Do you work for NG? (if not I apologize in advance, it sounds like something an NG person would say. )
Electrical utilities are required by federal/state law to have 10% spinning reserves. That means the generator is running at a speed equivalent to produce 60hz electricity! There are some states that allow some qualified peaking units to provide this spinning reserve even though not spinning. (Maybe that is the problem with BPA) The higher efficiency NG turbines CAN NOT recover from a loss of wind unless it is spinning. Further these units have their peak efficiency (the rated cost per kwh and co2 emissions) at 90-100% NOT sitting there spinning (like your car at a stop light). That means it is WASTING NG. The Peaking generators can recover from a loss of wind BUT there is the spin up time, It is less BUT not instantaneous. They were not fast enough to prevent the blackout in OH/MI. There is no large infrastructure of high tension lines, and wind mills need stepup transformers, substations, protective systems, etc. to hook up to high tension lines. Even you should know that you can’t hook up a propane tank to a transcontinental pipeline. Thus, these turbine are spread around in the areas where the wind farms are – and sitting there spinning, to minimize perturbations. In the grand scheme of things, does the PNW use less NG now by adding wind to the mix? Since they already had lower efficiency peaking generators, They probably do. But the real question is “How much less – in total – NG would they be using – TODAY – if they had NO wind turbines and the most efficient NG turbines (and I emphasize the most efficient) for the power they wanted generated at the time? An electrical engineer that knows all of the problems and regulations associated with electrical distribution will tell you that adding wind to the mix makes things less efficient, and that you are wasting NG, an engineer (salesman) that works for NG will tell you the opposite!
If T.B Pickens wants Wind Turbines – then he is going to make millions off of NG – PERIOD. No other explanation/justification needed.
Actually Rich I work in the the nuclear end of electricity generating industry. I have a lot of experience listening to people with an ax to grind explain why they do not like how their electricity is made.
As far as lectures go yours is better than most. You sound very authoritative. Of course it is all BS.
I happen to think that wind turbines are mechanical failure test platforms but I would like to be proven wrong by this generation of wind turbines. They are interesting technology but I will wait to be worried about too much wind in the mix.
The way to promote nuclear power is to talk about great performance of nuclear power plants not making up stuff about insignificant sources of electricity.
Kit – Talk to the dispatcher where you work.
Then read this ->
http://www.netl.doe.gov/technologies/coalpower/turbines/refshelf/handbook/TableofContents.html
Wind does not play well with nuclear. Wind wastes gas. It might play well with hydro – but then you cause problems with the fish. The hype with wind delays building nuclear – but at least it will make electricity so expensive that nuclear will put dollar signs in the investors eyes.
Agree with Cape Wind being a ripoff. It will cause our rates to rise with no good reason: it isn’t like more power is being produced when we need it.
Still, the travails of the Cape Wind project proved an important precedent in Massachusetts: that the common good has to come before NIMBYism. I’m glad that it was approved, for that reason, but now it should be required to sell power at prevailing rates into the ISO-NE pool, not get some special long-term contract from National Grid for very unreliable power at $0.24 per kilowatt which is basically hosing the ratepayer for the private benefit of Cape Wind developers.
Of course, I would be more glad if Cape Wind was canceled, Pilgrim 2, Pilgrim 3, Seabrook 2, and whatever nuclear power plant they were – once upon a time – going to build up in Montague near where I live were built. Far more reliable, cleaner, and will drive rates down to reasonable levels, instead of an expensive wind-powered boondoggle.
Another big problem with these RPS
My parents own a home in Cape Cod. It’s a really great place I love to go in the summer (especially when they’re not using it and I can bring a few friends). The only thing about it is that it only has an air conditioner in the master bedroom and my parents are rather strict about not adding any additional air conditioners (and certainly not central air conditioning) to the house because Cape Cod has some of the highest electricity rates in the country. It can get very hot and muggy in the summer.
I’ve done a lot of research on Cape Wind and the estimates for how much it could add to bills vary a lot, but if it goes over budget (which I think it probably will) it could have a staggering effect on local electricity rates because it could fall back on the local utilities to foot a big part of the bill.
I’ve actually been seriously looking into whether it may be cheaper to buy a high compression diesel generator and use that when the place is being occupied. It could be run on the equivalent heating oil which is legal for static uses.
Figure 2.39 dollars per gallon and about ten kilowatt hours per gallon running at a nominal throttle, that’s about 24-26 cents a kilowatt hour from a diesel generator.
As is that is slightly above the (staggering) cost of residential electricity on the Cape, but in the near future it may turn out to be a lot cheaper to burn your own fuel
Go for it Steve if you like listening to diesel generators while you are at the beach.
However, if you really like listening to diesel generators get a job at a nuke plant testing the backup diesels then you can afford to buy all the electricity.
I spent a summer at OCS in Newport RI. Do not recall it being very hot or humid. Spent a winter there a couple of years later and it was very cold but not as cold as Idaho.
I love rich kids complaining about the cost of electricity for their AC at the beach house on Cape Cod.
Very amusing!
Hey I for one am not a rich kid, yet I’m definitely complaining about high cost of electricity (rich people like Al Gore have no such worries). The idea of consumers searching for cheaper energy in all ways possible is not absurd at all, in fact this is what has been happening to our industry. To produce pair of jeans for example, it takes an average of 100 kWh of electricity. That explains why people in wind-powered Denmark for example, produce no such clothing but are wearing jeans made in Pakistan and India. On a consumer level, some folks can’t afford electric air conditioning for their home, so when it gets really hot they can be found in their air conditioned cars, idling the engine. These are all symptoms of the problem, which is caused by uninformed decisions being made in high places.
The $1.59 is a completely erroneous figure. They state that 50% of the electricity sold has a base price in 2012 of $0.207 per kWh, and the 3.5% increases are on top of that figure. This means that the residential customers will have to go from paying around $0.16 per kWh to over 20 cents at base – at least a 25% base increase. THEN the 3.5% annual increases kick in.
And all of that on top of tax credits on the capital investment. So, we are increasing the deficit to force utilities to pay for more expensive electricity. I don’t know how to say it other than that is stupid. Really stupid.