FIGURES DON'T LIE BUT LIARS FIGURE
Who Will Finance Cape Wind
Mirror, mirror on the wall, who is the most gullible of all? Where do we start? The list is endless. It includes prestegious environmental and conservation groups such as Audubon and the National Wildlife Federation; state and federal government agencies; trade groups such as the United States Chamber of Commerce; press outlets such as the Boston Globe, New York Times, Washington Poast, Chicago Tribune, PBS and more. And why not? How can any reasonable person not rise to support clean, renewable energy that will be cost-competitive and perhaps even save us money with zero environmental consequences?
The problem is that many of the claims made for utility scale wind power are simply not true. This is especially true for offshore wind whose capital cost is now solidly moored at $5 million per installed megawatt. The simple answer to the question of who will finance Cape Wind is this: first, United States tax payers through massive tax free cash rebates and second the unfortunate rate payers who will have no choice but to pay higher electric bills. While Cape Wind's rate increase seems small at less than $2 dollars per month to start, it rises by 3.5% every year, compunded. Worse yet, it is intended to be the first of many offshore wind projects whose eventual total capacity will reach 20% of Massachusetts' electric demand, and presumably the same for other states. Offshore wind power could well increase monthly electric bills 20% - 30%. The difference between buying the planned offshore wind power and buying most other things is that the purchase is neither voluntary nor subject to comparative price shopping. An electric bill arrives monthly and must be paid monthly.
Wind power developers have hit on what seems a winning formula: use huge tax payer subsidies to provide something everyone must buy, but at a price set by government regulators. This explains who will finance Cape Wind and presumably all the other offshore wind farms our government thinks we should build. Yes, the wind is free, but converting it into electricity and then delivering that electricty to individual users is far more expensive using wind power as a generation medium than any other single source of power generation except solar. But now, distributed solar power is finally competitive with almost any other form of energy generation, even in some residential applications. In properly designed installations solar power can achieve 5 - 7 year payback of its capital costs and for the remainder of a quality system's twenty-five year life span generate free power...$0.0/MW.
For nine years in the case of Cape Wind we have been barraged with misinformation. Since the wind is free fuel, so the song and dance went, wind generated power will be cost effective, probably even saving rate payers money. However, the recently revealed draft PPA for Cape wind's power tells the truth: offshore wind is at least double the price of conventional mix of electric generation. Unfortunately there is no law or regulation defining cost effective. The figures shown to promote Cape Wind in particular and offshore wind in general always paint a rosey picture. Figures don't lie but...........If we believe what we have been told by Cape Wind supporters we are only deceiving ourselves.
Let's revisit Governor Deval patrick as he spoke to a small crowd of folks in the Zion Union Baptist Church Museum of African American and Cape Verdian History in Hyannis, Massachusetts on Thursday evening, August 5 of this year. The Governor said clearly that natural gas is not a reliable fuel in terms of both supply and price. That is strange because two weeks earlier at an energy industry conference in Washington, D.C. I heard industry experts, people responsible for the purchase and transmission of vast quantities of electricity all over North America say exactly the opposite. In fact, the uniform opinion was that things are looking up for the approval of an entirely new generation of nuclear power and that the price competition would likely be between nuclear and natural gas as oil prices and supplies fluctuate wildly and coal becomes ever more commonly condemned due to the harmful effects of its mining techniques. Natural gas prices have fallen 50% over the past two years and are expected to remain low as new domestic reserves are discovered every month.
Is it more than interesting that Governor Patrick was saying exactly what Cape Wind's CEO, Jim Gordon, has said for several years? The Governor, after all, must get his energy knowledge from some where. He certainly did not come by it at Harvard Law School or when he worked as general counsel for Pepsi. Does he know that while Jim Gordon is telling people not to count on natural gas for a stable energy future he is himself building a new 400MW gas-fired plant in western Massachusetts? A plant that will burn diesel fuel when it is economically advantageous to the developer? Our governor truly is a nice fellow and very smart, but he is also apparently being mislead when it comes to energy policy.
What Governor Deval Patrick and all of us would do well to remember is that if something sounds too good to be true, it probably is. He and we should also remember an age old truth: in order to succeed even the biggest lies and the best cons must have enough truth in them to appear true. Hence the old saying: Figures don't lie but liars figure.
COPYRIGHT 2010 By Peter A. Kenney