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Lessons from lemmings: The EU’s green power folly  

Credit:  Larry Bell, Contributor, www.forbes.com 4 October 2011 ~~

Lemming powers of observation aren’t highly regarded. Wouldn’t you think witnessing fellow critters plunge en masse over cliff edges would offer cause for some among them to reconsider the perilous path ahead? But then some humans, most notable government leaders, are similarly lacking in foresight. This deficiency is evident in the E.U.’s wind and solar energy stampede which has sped their arrival to the brink of economic collapse. Before America races any farther down that same road, let’s pause to heed lessons from their costly experiences. And we might learn much from our own as well.

Consider Denmark. On Earth Day, 2010, President Obama praised the country as a great green power model, telling an Iowa audience that “America produces less than 3% of our electricity through renewable sources like wind and solar – less than 3%. Now, in comparison, Denmark produces almost 20% of their electricity through wind power.”

Yet a 2009 report issued by CEPOS, a Danish think tank, tells a far different story. Its study found that while wind provided 19% of the country’s electricity generation, it only met an average 9.7% of the demand over a five year period, and a mere 5% during 2006. Since the country can’t use all the electricity it produces at night, it exports about half of its extra supply to Norway and Sweden where hydroelectric power can be switched on and off to balance their grids. Still, even with those export sales, government wind subsidies cause Danish customers to pay the highest electricity rates in Europe.

Germany’s frenetic foray into wind and solar power established a variation of subsidies in the form of a “feed-in law” requiring utilities to purchase different kinds of renewable energy at different rates. This has placed solar power costs at an equivalent of 59 cents per kilowatt hour, compared with between three and ten cents per kWh for conventional electricity. Subsidies for wind power are three times higher than conventional electricity. Since the government has guaranteed these massive subsidy markets for 20 years or more, the industries had no problem attracting early investors.

But it didn’t work out very well either for business, or for private households, raising energy rates 7.5% in 2008. Nor has it been any bargain in converting tax investments into new jobs, with average annual subsidized per-worker wages in photovoltaics reaching $240,000.

As for clean energy carbon abatement benefit credits on the European Trading System, the math didn’t add up very favorably either. Abatement costs for carbon from wind generation were $80 per ton, whereas carbon traded at only $19 per ton.

Worse, the wind produced only about one-fifth of its installed capacity. Ironically, since Germany has shut down some of its older nuclear plants in response to the nuclear accident in Japan, they now have to import nuclear power from France and the Czech Republic. To help compensate for this shortfall, the country plans to create a 50 MW offshore wind farm in the Baltic Sea, and expand capacity to 10,000 MW offshore by 2020. Construction, maintenance and power transmission requirements will be much more costly than land-based installations, requiring even higher subsidies and consumer pain.

Speaking from the White House after an October 2009 meeting with Prime Minister José Luis Rodríguez Zapatero of Spain, President Obama lauded his country as a fine example of renewable energy progress: “We have enormous commercial ties between our two countries and we pledge to work diligently to strengthen them, particularly around key issues like renewable energy and transportation, where Spain has been a worldwide leader and the United States has enormous potential to move forward.” Yet a study released by researchers at the Universidad Rey Juan Carlos soon afterward presented a far less enviable picture.

Since 2000, the Spanish government had spent $791,597 in subsidies to create each green energy job, and exceeded $1.38 million per wind energy job. Each of the green jobs created cost 2.2 jobs in lost opportunities elsewhere in the workforce, and each MW of installed wind energy destroyed 4.27 other jobs. This isn’t something that Spain can afford, a country with a current 21.29% unemployment rate leaving 4.9 million jobless during the first quarter of this year. It now appears they have no choice but to slash subsidies as one measure to address their dismal deficit status.

Italy’s wind and solar experience record is even worse. According to a study conducted by researchers at the Bruno Leoni Institute, the amount of capital required to generate one job in the renewable sector would create between 4.8 and 6.9 in the industrial sector or elsewhere just based upon subsidies alone. If the energy value of those projects were factored in even more non-renewable jobs would result. It was estimated that of the 50,000 to 120, 000 renewable jobs Italy proposes to create by 2020, 60% will be temporary.

Experiences in the United Kingdom are similar to those in other E.U. countries. A study by Verso Economics determined that each renewable job “created” by subsidies displaced 3.7 others in their general economy. “Renewable Obligations”, which increase market prices for electricity from renewable sources, cost U.K. consumers an additional $1.75 billion during 2009/2010.

U.K. wind turbines produce energy at about 21% of installed capacity under good conditions. Under freezing winter conditions the output can be miniscule because very cold weather and high winds require turbines to be shut down to avoid damage. As in Germany, unreliability in meeting power demands has necessitated importation of nuclear power from France. Also, similar to Germany, the government is closing some of its older coal-fired plants – any one of which can produce nearly double the electricity produced by all of Britain’s 3,000 wind turbines combined.

Last year, wind generated 2.3 % of the electricity consumed in the U.S. thanks to generous subsidies and other preferential benefits. Included is an annual $3 billion federal grant program for renewable energy projects, more than $30 billion set aside in 2009 stimulus funds, and Renewable Portfolio Standards mandating purchase quotas set by many state governments. Solar and wind each receive more than 50 times more subsidy support per megawatt hour than conventional coal, and more than 20 times more in terms of average electricity generated by coal and natural gas.

Just as in Europe, without all that help, U.S. wind and solar wouldn’t have survived, and very likely won’t in the future. The Wall Street Journal has reported American Wind Energy Association CEO Dennis Bode warning that without the extension of the Federal 1603 [grant program] investment credit, the wind industry would “flat line” or slope downward.

In January 2009, President Obama pledged: “We will put Americans to work in new jobs that pay well and can’t be outsourced – jobs building solar panels and wind turbines.” And just how are we doing on this so far?

Well, $535 million of stimulus money was loaned to Solyndra, a photovoltaic manufacturing company funded to create a new facility that was supposed to create 3,000 construction jobs, and 1,000 more after it opened. Now, only one year later the company, which never turned a profit, has filed for bankruptcy, leaving taxpayers holding the tab.

Undaunted by the Solyndra scandal, the U.S. Department of Energy rushed to award more green power loan guarantees just before the program funded by the 2009 stimulus expired on September 30. Tonopah Solar Energy received $737 million for a project in Nevada that proposes to create 600 temporary construction jobs and 45 permanent ones. Mesquite Solar 1 received $337 million for a solar photovoltaic project about 45 miles west of Phoenix. Granite Reliable Power will receive a $168 million loan guarantee for a 33 turbine wind farm in New Hampshire.

A new solar power plant being built in Blythe, California had already received a $2.1 billion stimulus loan. Speaking there in June, Interior Secretary Ken Salazar projected that the project would create more than 1,000 construction jobs in the area, would advance U.S. global competition in green technologies, and would support the president’s goal of “generating 80% of electricity from clean energy sources by 2035.” Not highlighted was that the massive $6 billion project was awarded to a German firm, Solar Millennium.

While Solar Millennium will have the project work performed by its U.S.-based subsidiary, Solar Trust of America, STA is actually a joint venture between Solar Millennium and Ferrostall, another German solar developer. That venture was created in 2009, just in time to cash in on the stimulus.

The Energy Department provided $1.45 billion in loan guarantees to Abengoa Solar, a Spanish firm, to build plants in California and Arizona. They also reached another $1.2 billion loan guarantee agreement for a second Arizona project. Necessary profitability for repayment will depend upon large additional subsidies from economically-strapped Spain.

Of the stimulus grants so far, more than 80% have gone to wind farms (covering up to 30% of all project costs). A Meadow Lake wind development project in Indiana that is owned and operated by Horizon Wind Energy received $276 million. Horizon is a wholly owned subsidiary of EDP Renovaveis, a Portuguese company. The turbines are manufactured by Vestas in Denmark, and are mounted atop 350 foot towers imported from Vietnam. EDP and Horizon also own and operate the Blackstone wind farm in Illinois that received a $171 million grant.

So maybe our green power stimulus programs are doing some good after all – at least to help Europe out of its economic mess that identical policies have contributed to there. Meanwhile, so long as natural gas drilling is restricted, climate crisis hoax-premised EPA regulations strangle fossil power generation, and nuclear energy expansion is delayed, we are racing hell-bent along the same road to perdition. Let’s consider the peril before joining the Europeans in a final, fatal jump.

Source:  Larry Bell, Contributor, www.forbes.com 4 October 2011

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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