gcarter
07-13-2009, 07:54 AM
And why so many "Green Dreams" won't work.......
US wind power
Published: July 12 2009 19:31 | Last updated: July 12 2009 19:31
http://media.ft.com/cms/7b93589a-6f09-11de-9109-00144feabdc0.gifFor sale, 30-storey high windmills, as new, $3m each.
Investing in alternative energy is far from riskless, as US billionaire T. Boone Pickens, unhappy owner of 687 unwanted wind turbines, can attest. He made a Texas-sized bet last year that the largest US renewable energy project would allow him to do well by doing good, forecasting a 25 per cent annualised return on the $10bn-$12bn venture. He tied its announcement to a $60m public relations blitz promoting US energy independence. But success was predicated on fossil fuel prices remaining high and the willingness of both taxpayers and local utility customers to subsidise him.
Federal subsidies, including a direct “production tax credit” and accelerated depreciation, remain on the table but much else has changed. Natural gas, which sets the marginal price of electricity, has dropped by 70 per cent since Mr Pickens announced the project. The final straw, though, was the delay in state funding for expensive transmission lines needed to carry the power to customers.The Department of Energy expects wind to reach 4 per cent of US electric generation by 2030, from 1.3 per cent now – based on state-level targets. This could be achieved even without mammoth projects such as Mr Pickens’ delayed wind farm, which would have comprised 15 per cent of existing US wind output. He hoped to see wind penetration reach a far higher 22 per cent.
Wind farms built far from cities and outside the shelter of regulated utilities’ rate bases remain risky without a big jump in infrastructure subsidies. Linking the windy Great Plains to big population centres could cost $100bn for transmission lines alone, according to one utility consortium. That does not count the cost of turbines or the subsidies needed to make them competitive. And, because of wind’s intermittency, they must be supplemented by gas-fired plants too.
Commercial risks such as that are too much for anyone – even a swashbuckling oilman such as Pickens.
US wind power
Published: July 12 2009 19:31 | Last updated: July 12 2009 19:31
http://media.ft.com/cms/7b93589a-6f09-11de-9109-00144feabdc0.gifFor sale, 30-storey high windmills, as new, $3m each.
Investing in alternative energy is far from riskless, as US billionaire T. Boone Pickens, unhappy owner of 687 unwanted wind turbines, can attest. He made a Texas-sized bet last year that the largest US renewable energy project would allow him to do well by doing good, forecasting a 25 per cent annualised return on the $10bn-$12bn venture. He tied its announcement to a $60m public relations blitz promoting US energy independence. But success was predicated on fossil fuel prices remaining high and the willingness of both taxpayers and local utility customers to subsidise him.
Federal subsidies, including a direct “production tax credit” and accelerated depreciation, remain on the table but much else has changed. Natural gas, which sets the marginal price of electricity, has dropped by 70 per cent since Mr Pickens announced the project. The final straw, though, was the delay in state funding for expensive transmission lines needed to carry the power to customers.The Department of Energy expects wind to reach 4 per cent of US electric generation by 2030, from 1.3 per cent now – based on state-level targets. This could be achieved even without mammoth projects such as Mr Pickens’ delayed wind farm, which would have comprised 15 per cent of existing US wind output. He hoped to see wind penetration reach a far higher 22 per cent.
Wind farms built far from cities and outside the shelter of regulated utilities’ rate bases remain risky without a big jump in infrastructure subsidies. Linking the windy Great Plains to big population centres could cost $100bn for transmission lines alone, according to one utility consortium. That does not count the cost of turbines or the subsidies needed to make them competitive. And, because of wind’s intermittency, they must be supplemented by gas-fired plants too.
Commercial risks such as that are too much for anyone – even a swashbuckling oilman such as Pickens.