Will We EVER Evolve... 'Wind's Latest Problem: It ... Makes Power Too Cheap' - DailyKos

[WillyT]

Wind's latest problem: it ... makes power too cheap
by Jerome a Paris
Sun Apr 25, 2010 at 01:56:53 PM PDT
Part of my Wind power series.
Full disclosure: I advise wind developers on their financing needs.

<snip>

Bloomberg has a somewhat confusing article about the newest complaint about wind power, but the gist of it is that wind power is an issue for the industry because it brings their revenues down:

Implicit in the article, and the headline (which focuses on lower revenues for RWE, a big German utility) is the worry that wind power will bring down the stock market value of the big utilities - which is what the readers of Bloomberg et al. care about.

But despite the generally negative tone of the article, it's actually a useful one, because it brings out in the open a key bit of information: wind power actually brings electricity prices down!

windmills (...) operators in Europe may have become their own worst enemy, reducing the total price paid for electricity in Germany, Europe’s biggest power market, by as much as 5 billion euros some years

The wind-energy boom in Europe and parts of Texas has begun to reduce bills for consumers.

Spanish power prices fell an annual 26 percent in the first quarter because of the surge in supplies from wind and hydroelectric production

This tidbit of information, which will hopefully begin to contradict the usual lies about the need for hefty subsidies for the wind sector, has been publicised by EWEA, the European Wind Energy Association in a report on the merit order effect (PDF). This is the name for what happens when you inject a lot of capital-intensive, low-marginal-cost supply into a marginalist price-setting market mechanism with low short term demand elasticity - or, in simpler words: when you have more wind, there is less need to pay to burn more gas to provide the requisite additional power at a given moment.

I've long argued that this was one of the strongest arguments for wind (see my article on The cost of wind, the price of wind, the value of wind from last year), and I've pushed the EWEA people to use it more - so this study (which I was not involved in) is most welcome.

The key thing here is that we are beginning to unveil what I've labelled the dirty secret of wind: utilities don't like wind not because it's not competitive, but because it brings prices down for their existing assets, thus lowering their revenues and their profits. Thus the permanent propaganda campaign against wind. But now that this "secret" is out in the open, it's hopefully going to make one of the traditional arguments against wind (the one about its supposed need subsidies) much more difficult to use... The argument remains true for solar, and to a lesser extent for offshore wind, but the utilities are going to complain much less about offshore wind given that they are investing so much capital in that sector right now. The reality is that wind power brings prices down for consumers, even taking into account the cost of feed-in tariffs or other regulatory support mechanisms, which means that these regulatory schemes are not subsidies, but rather smart corrections of market inefficiencies for the public good.

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More: http://www.dailykos.com/storyonly/2010/4/25/860668/-Winds-latest-problem:-it-...-makes-power-too-cheap

:banghead:

:kick:

[Demeter]

1. Yes Sir! Can't Have that!

The greed never stops.

[Dogmudgeon]

9. And actually, we won't

Wind energy development has been plagued with a number of just-plain-dumb problems that promise to keep it expensive and piss people off.

Examples: poor siting leading to flicker, noise, and subsonic vibration problems; shoddy construction; destruction of local habitats from construction activity; insensitivity to local residents and town councils; placement in areas with poor wind penetration which could have been easily surveyed beforehand; etc. http://www.wind-watch.org/">Peoples' anti-wind coalitions are currently popping up faster than similar anti-nuke coalitions in the late 1970s -- and without any celebrity prompting at all.

A major offshore wind project in Maine was recently scuttled because of such oversights. That's a full gigawatt of power that has been at best delayed, or more likely, lost.

It's not Greed, it's Stupidity. And it could be remedied fairly easily with a little forethought. But many energy executives who want wind turbines, in their "enthusiasm", do not easily accept guidance or delay. They want nature photos of children, birds, and wind turbines for the Annual Report or for a TV commercial, with little concern for how it gets done. If life were a cartoon, it would make you tear your hair out.

Such is the miracle of the Invisible Hand, as it strokes the Invisible ... Ego.

Wind power could be a bonanza, and soon. In spite of all these fumbles, it is still growing at 15-25% each year. Unfortunately, lacking any vision beyond "ooh, Wind Turbines, how Cool and Green! I MUST have one!", the industry is still lurching around like a hooked fish.

We need a more detailed national vision for wind, dealing with its unique mix of weaknesses, challenges, and risks -- and potential for a cornucopia of rewards.

--d!

[jtrockville]

2. Do we exist to serve the market, or does the market exist to serve us?

[WillyT]

4. LOL !!! - Remember... 'To Serve Man' Was A Cookbook !!!

:evilgrin:

:hi:

[TheKentuckian]

3. The no choice but carbon folks are liars or dupes

Renewables over time will kill energy production as a profit center, eventually with technological advancement they will make capitalism as it has existed a dicey proposition. Virtually free power and the ability to manipulate matter would/will create a mammoth shift in the way things work and do serious damage to resource scarcity and our SOP breaks down in such an environment so clearly the folks that are benefiting will do and say anything to protect their ability to have their resource advantage.

Cheap, available,clean, and renewable energy is the bane of the status quo.

[Vinnie From Indy]

6. Amen brother!

The nightmare scenario for Big Energy is local, cheap, renewable power for the masses. It is one reason they are pushing so hard for nuclear power. With nuclear, they still have a product to sell in perpetuity. Without it, they are dinosaurs just waiting for the comet to hit.

[Demeter]

18. Too Many Things Do Not Naturally Yield "Profits"

and yet our "free-market system" is trying to squeeze profits out of things that have no intrinsic multiplier:

If you start a business, you are adding value to raw materials that people will pay for. You can ask for more than cost. Either the products are bought with discretionary income, or they are put to use to generate more value (food for people energy, tools, etc.)

If you are healing the sick--they may or may not be productive thereafter. Do you gouge all the patients for profits beyond the cost of the service?

Same with energy--if it's there for the taking, and you steal someone's wind, do you profit from it? Do you pay a royalty or rent?

The whole damn economy is based on the principle: "Might makes Right".

The US is based on the principle: equality for all. You can't have it both ways, and after 300 years of trying, the wheels are coming off.

[zipplewrath]

5. Well, slow down jasper

Okay, yes, it is good news that consumer prices are coming down. It's also good news that we're buring less fossil fuels. It is also good news that wind energy is being demonstrated as a cost effective way of producing electricity.

Okay, but the primary issue that the article has is that wind power, being transient in nature, has to have fossil fuel based electrical generation in parallel. So when you aren't at full capacity, something has to be producing at less than maximum efficiency/capacity. The problem then becomes, whose ox gets gored. I.e. who is going to make less money from their asset than they otherwise could. When you shut off the wind based power, the cost of generation goes up, and the wind turbine guy loses money. When you throttle back the coal fired plant, the guy who owns the coal plant makes less money (they guy selling the coal don't do so well either). The coal plant guys point is you HAVE to have his plant. But with the wind turbine, you don't HAVE to have one.

Now, even there we have some issues. It doesn't have to be a coal fired. It could be anything from hydro-electric to solar. And ultimately that's the direction in which we need to head. Also, even the coal fired doesn't run a full capacity all the time, so that asset will always been at some reduced income base. It is why they are constantly working towards load balancing. It's why they sell power at lower costs at night (when demand is lower). It will be when many of us recharge our cars in the future.

Wind is coming around. The basic point of the article is that, long term, the fossil fuel based plants will become less lucrative. Outside of Bloomberg, one is allowed to smile when they say that.

[Demeter]

19. Not True

What wind needs is storage of power in parallel. As does Solar, water, and any other renewable.

[zipplewrath]

27. Okay, good point

I'm not sure what technology you are envisioning, you're talking about storing alot of power. I have heard of desires of using the batteries in our EV's to "load level" during the night. But I don't think that is the magnitude of power you are suggesting. I've heard of folks suggesting the building of "reversible dams" for this purpose. But they have to be huge (or silly tall) to store the kinds of power that would replace a coal fired plant.

[JCMach1]

7. Doubled edged sword- - lower prices make private windfarms

lease feasible as an enterprise...

[smoogatz]

8. This is why electricity generation should not be a for-profit business.

It's actually creating a very inefficient market. Public utilities should be exactly that--publicly owned non-profits.

[Dogmudgeon]

10. + a whole lot

:thumbsup:

As my grandpappy Delano used to say, "Invisible Hands are the Devil's Workshop".

--d!

[WillyT]

11. And PG&E Is Funding The Exact Opposite In California... Prop 16

<snip>

Proposition 16, the New Two-Thirds Requirement for Local Public Electricity Providers Act is on the June 8, 2010 ballot in California as an initiated constitutional amendment.

If Proposition 16 is approved by voters, it will take a two-thirds vote of the electorate before a public agency could enter the retail power business. This will make it more difficult than it is currently for local entities to form either municipal utilities, or community wide clean electricity districts called Community Choice Aggregators (CCAs). Forming a local municipal utility or a CCA, if this measure is enacted, will require the approval, through election, of 2/3rds of the voters who live in the area of the would-be local municipal utility or CCA.<1>

Pacific Gas & Electric is the primary financial sponsor of the initiative, having contributed $28.5 million through March 26, 2010. That makes PG&E the Goliath in a David-v-Goliath battle, since Prop 16's opponents have raised $40,000 through late March.<2>,<3>

The proposed constitutional amendment would require a two-thirds majority vote of local voters before a local government could:

* Establish a Community Choice Aggregation (CCA) program.
* Use public funding to implement a plan to become a CCA provider
* Expand electric service to new territory or new customers.<4>

The CCA program, established in 2002, allows local governments to purchase blocks of power to sell to residents, and to construct municipal electricity generation facilities, which means that cities and counties can become competitors to private utilities.

<snip>

Link: http://www.ballotpedia.org/wiki/index.php/California_Proposition_16_%28June_2010%29

:shrug:

[havocmom]

12. K&R

I am SO old, I recall Americans being told how nuclear power would bring electric costs to near-zero! And they were already pretty low back then.

Well, I am still waiting for those people who talked us into allowing nuclear plants to show us the savings.

Wind sounds good to me. Local, fewer transmission lines, less vulnerable to weather AND greedy spot market manipulators.....

[madokie]

21. I'm right up there with you on being around a long time

and I too remember when they were telling us it would be too cheap to meter, almost as if we can have free energy, they said, we'd only need to pay a small fee for the use of the line getting it our houses. They were all lies then same as that industry is doing today, lying to use about the safety, the numbers who have died because nuclear energy and on and on. I've read it here that no one and I mean no one has died because of nukes but we know better. Hell, there is one here who will argue that the safest place to store the waste is on site and if you've seen any pictures of these on site storages that is used it'll stop you in your tracks. We don't need nuke power for anything outside of the medical field and only limited uses of that. I'm against nuclear energy just as strongly as I'm against killing for peace.

[MisterP]

13. that ain't evolution, that's "not having a head filled with cement" knr

[MadHound]

14. That is the emerging problem with not just wind, but solar and other green ways of generating power

They're all cheap. Worse yet, especially in solar, but also in some wind generations systems, these systems virtually eliminate the need for a central energy provider.

This is why we're dragging our feet on alternatives, the decentralized method of clean, green energy production threatens the very existence of Big Energy, and lord knows, in this crony, capitalist government we have, we can't allow Big Energy to go under:eyes:

[Odin2005]

15. FACEPALM

[Greyhound]

16. The only "problem" we have with energy is how to make it and still hold onto the corporate

control and distribution scheme. The technology to produce over half of the energy we need currently exists, but it's completely distributed and once the initial purchase is made, there is virtually no residual income generated, and that would mean the end of Big Energy and Big Oil and Big Developers.

[Demeter]

20. You Talk As If That Would Be a Problem!

[Greyhound]

25. It's the only problem that we have. The solutions to most of our problems are simple

and self-evident, it's only when we require that solutions "not upset the system" that they get complicated.

[earth mom]

17. Gawd forbid those power companies make less money!

What the hell is the world coming to?! :sarcasm:

p.s. Fuck them!

[WillyT]

22. Even The Game 'Monopoly' Recognized Utilities As Slow, Steady, And Risk Averse Investments...

and not get rich quick investments.



:shrug:

[Wednesdays]

23. *facepalm*

Ohhh...the horrors of saving billions of dollars (not to mention money saved by having a cleaner planet). What will we ever do with all that money?

[fishwax]

24. k/r

:kick:

[RandomThoughts]

26. Or just let the profit motive make all the decisions.

And ride the whirlpool into the black hole.

And the path of profit first is not that hard to figure out. It can be easily shown. During times with less consolidation and speed of information, and ability to broadcast to many people, it was countered by being distributed.

There were always issues, but as tech increases, the profit motives abilities make it circle deeper and deeper around the event horizon of the black hole.