When it comes to America’s energy policy, we are continuing our headlong rush, like lemmings over a cliff, to self-extinction. September 30 was the deadline by which the Department of Energy needed to get the remaining billions in stimulus funds out the door.
Apparently, no one learned any lessons from the Solyndra scandal.
Shoveling $4.5 billion in stimulus funds to 4 solar projects is a big issue being covered by the national media. In two little states, the lemming analogy is still relevant, though under reported.
Both Delaware and Rhode Island are a part of the floundering Regional Greenhouse Gas Initiative (RGGI) and both have a Renewable Portfolio Standard (RPS) requiring cuts in carbon emissions and increases in renewable energy. Both raise energy costs to consumers.
In Delaware they are pushing forward with two projects that they believe will put them at the forefront of the “Green Revolution.” (Considering the state of the green revolution, I am not sure why any state would want to be in the forefront.) Delaware’s projects require surcharges, subsidies, grants, and guarantees—but give the government officials bragging rights!
Delaware’s projects include a solar park—touted as the second largest east of the Mississippi, and an experimental fuel cell facility that will allow Delaware to be cutting edge when it comes to energy. The Bloom Energy project to be built on the site of a defunct Chrysler factory and the Dover Sun Park both use viable technology to produce electricity—but both will cost businesses and consumers more for electricity.
The fuel cells, called Bloom Boxes, use natural gas to generate electricity. It does work. But it only comes close to being cost effective if it qualifies for the states renewable energy credits that are designed to move the state away from fossil fuels. Despite Nancy Pelosi’s firm assertion that “natural gas is a clean, cheap alternative to fossil fuels,” natural gas is a fossil fuel. Delaware’s Governor Jack Markell persuaded the legislature to change the state code to allow power from fuel-cells to count towards its RPS.
At least building more natural-gas-fueled electricity generation makes some sense for Delaware as they are located near the plentiful natural gas of the Marcellus Shale and due to the abundance of new natural gas discoveries it is relatively cheap. However, a better investment of tax-payer dollars would be on a proven winner such as combined cycle natural-gas-fueled power plants rather than on 150-year-old technology that has yet to yield a profitable fuel cell company—even if it is supposedly green.
The 10 mega-watt, 103 acre, $50 million Dover Sun Park was commissioned in August and is now delivering power—albeit more expensive electricity. The bragging rights here are that it is the state’s first utility scale solar project. According to estimates provided by the U.S. Environmental Protection Agency, it will offset more than 12,000 tons of carbon dioxide emissions each year. Delaware participates in regional cap and trade auctions and permits to emit 12,000 tons of carbon are only worth about $22,000 a year— if they could be sold. The market for carbon permits has collapsed since New Jersey pulled out of the market and 83% of the offered credits went unsold at the September auction.
What helped make the solar project attractive is the renewable energy credits would be tradable/salable through the manufactured energy credit market. However, between the time the Dover Solar Park was planned and the time the first mega-watt was delivered, the market has all but fallen apart. The price for the energy credits was about $270 and is now about a third of the planned for price. Delaware utilities signed long term contracts for these credits at higher than market prices and now the ratepayers will pay the price for the next twenty years.
Who makes up the difference?
One way or another, like an environmental plague, it hurts the public—either in the form of rate increases or government subsidies which come from our taxes.
In Rhode Island, two of the state’s top elected officials, Governor Chafee and Senator Whitehouse, supported Turbines, Towers & Vessels, an event designed to help vendors get “incentives” to underwrite renewable energy projects in the state—specifically off shore wind projects. The Cape Wind offshore project took ten years before it finally got approved and even now it faces law suits. The event’s publicity states that offshore wind projects are “catapulting forward” and that they will “Make Rhode Island a leader in the emerging clean energy economy.” The conference was held in Providence last month and vendors lined up get their share of rate-payer funded projects.
All of these projects would be great if they were a better mouse trap; if they were cheaper, more reliable and better land use. But they are not. They are more expensive, less reliable and use more land (or water). They also require tax and/or rate payer funded subsidies or “incentives”—for what?
The whole idea of renewable energy is based on two once-popular fallacies:
1) Climate change is a manmade crisis caused by the burning of fossil fuels and it can be fixed by replacing fossil fuels with “renewables”—even if only the United States plays along.
2) We have an energy shortage.
So we are going to go into debt and pay more for energy, for what? When these two false assumptions are removed the renewable energy rush, heads off the cliff. We create problems while solving none.
As the governors of Delaware and Rhode Island believe, these projects create jobs—after all, the now complete Dover Sun Park did employ 100+ people for 6 months. But the higher energy costs kill jobs.
In Rhode Island, Toray Plastics, one of the state’s largest employers, is making expansion decisions based on energy costs. They have a plant in Rhode Island and one in Virginia. The manufacture of the plastics is energy intensive so costs factor heavily into the decision. Electricity in Rhode Island is twice as expensive as in Virginia. The expansion has the potential for an additional 230 jobs and Rhode Island doesn’t want to lose them. The solution? In October 2010, Toray received approval for a $490,000 in stimulus funds and a $454,482 federal tax credit to move forward on a $2 million project solar farm at Toray’s RI plant. Then they got a $1 million grant from the RI Economic Development Corporation with $750,000 coming from the Renewable Energy Fund—generated by a surcharge on electric bills (taking from the customers to give it back to the customers, minus some off the top for government administration). The remaining $250,000 will come from federal stimulus money received by the state. These funds make the solar project feasible and, as a result, Toray can afford to expand in RI, meaning more jobs at the RI plant.
Perhaps it would have been better to toss the RPS, exit RGGI and focus on keeping energy as cost-effective as possible—especially for these two states that already have comparatively high energy costs—until a better mouse trap does come along. When someone really does have a better mouse trap, people will be jumping off the cliff to invest their money. A citizen at a September 29 hearing for the Bloom project summed up the whole situation when he said, he had no trouble with Bloom. “If it was a private venture, I'd be patting you guys on the back. I'd like to see all subsidies end.”
A true better mouse trap doesn’t need stimulus funds. By contrast, with Solyndra, our tax dollars rushed off the cliff to predicted extinction.
Bloom Boxes, the Dover Sun Park, Turbines, Towers & Vessels—I smell a rat.
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