Monday, August 13, 2012

Skyrocketing electricity rates, redux

A few days ago, I drew attention to a report highlighting the miserable measured performance of the Windtronics WT6500 rooftop wind turbine:

At the rate the WT6500 is delivering power at our test site, it would take several millennia for the product to pay for itself in savings—not the 56 years it would take even with the 1,155 kWh quote we received.
 In my comments, I looked only at the failure of the thing to perform as advertised, mocking the "several millennia" it would take to pay back the installation cost of the thing at its measured rate of performance.

But that wasn't the most important part of the sentence; this was:

...not the 56 years it would take even with the 1,155 kWh quote we received.

Why is that the most important part?  Because of what the article said earlier:

The Honeywell costs $11,000 installed, comes with a five-year warranty and has a 20-year expected product life.

So in other words, even at peak projected performance, the system is likely to have a 56-year payback period...but is only expected to last 20 years.  That's not "mean time between failures"; that's lifespan.  The company is telling you that the thing is going to completely wear out and need replacement before you will have recovered even half of the installation cost.

So here's my question: if Windtronics' own product data and performance models are telling you that the thing is going to cost you more than it will save you...why did you install it in the first place?!

If you're having a hard time coming up with an answer to that question that doesn't boil down to "because we're idiots", don't feel bad.  The government of Ontario Premiere Dalton McGuinty is having exactly the same problem:

TORONTO - Ontario residents could end up paying some of the highest costs for electricity in the developing world because providing wind and solar energy will cost about 40 per cent more than government estimates, according to a new study.

Ratepayers should expect their electricity bills to rise by 65 per cent by 2015 and 141 per cent by 2030 — substantially more than current government predictions of 46 per cent and 100 per cent, the study found.

The average residential user's annual bill, which currently stands at $1,700, will exceed $2,800 by 2015 and be over $4,100 by 2030, it predicts.

Certain costs weren't included in the government's estimates, such as inflation, transmitting electricity to the provincial grid from wind and solar facilities and backup generation for potential disruptions, the study found.

Of those three "unincluded costs", two of them - grid extension costs and the cost of backup generation because solar and wind are intermittent and unstorable - would not have existed if the government had kept its fingers out of the electrical generation business.  By the way, that piece is from the hard-line right-wing anti-green news outlet known as The Huffington Post.

And that's before the turbines start to wear out.  Think of the glorious future ahead for Ontario!

Kamaoa Wind Farm, Big Island, Hawaii - 27 years later

Kamaoa is a legacy of the "wind rush" of the late 1970s and early 1980s, fuelled by high oil prices and - surprise, surprise! - exceedingly generous government subsidies!

Turbines were built across several states, though there was a preponderance in California, where nearly 17,000 sprouted up from the dusty earth.

Nearly all of these were concentrated in three giant wind farms: Altamont, east of San Francisco; Tehachapi, on the edge of the Mojave desert; and San Gorgonio near Palm Springs.

In theory, conditions couldn’t have been better. Each of these are passes that benefit from just the right sort of wind that turbines need — strong and almost continual.

Better still, they were crossed by under-used high voltage lines to take away the power.

But most importantly for the scrum of investors who were thrusting their snouts into the trough, there was the extraordinary generosity of the government.

Between 1981 and 1985, federal and state subsidies in California were so favourable that investors could recover 50 per cent of the cost of a wind turbine.


But as tends to happen with a business that is driven by financial incentives, it lasted only as long as the subsidies. In 1986, the price of oil tumbled and the subsidies started to die out. Suddenly, the wind energy sums didn’t add up any more.

And just like the gold rush miners who had rushed to the same Californian passes a century earlier, the wind prospectors departed in such a hurry that they didn’t even bother to take down the turbines they had littered across the state.

With so many moving parts to worry about, maintaining turbines is expensive — too expensive when the electricity they could produce was suddenly worth so little.

‘So when something broke, you simply didn’t send a repairman because it just didn’t make financial sense,’ Hawaii wind sceptic Andrew Walden told me.

With some turbine makers going out of business, there were no spare parts either.

According to the California Energy Commission, the collapse in subsidies stalled the state’s huge wind energy industry for nearly two decades.

And what reinvigorated California's wind industry, of course, was not a return to high oil prices, or a sudden demand for clean power, or a bolt from the blue - but a return to politically-motivated subsidization of "green power".

This isn't ideology, people - it's history and economics.  If buying something costs you more than what you get from it, you go broke; it's as simple as that.  California is a case study in this principle, and on a broader scale, the United States on its current economic trajectory is, like the rest of the Western world, a macro-example. 

The mania for wind farms is just the tip of the iceberg, a deliberate volatilization of wealth that serves no purpose beyond placating the elusive Carbon Gods; an auto-da-fe in the most traditional sense, an act of faith no different from that which saw wealthy folk in the Middle Ages buying indulgences from professional pardoners, or paying quacks and alchemists to feed them potions containing their own pulverized gold and jewellery.

But hey, why draw attention to any of this?  It's only numbers.  It's not like this is going to throw any of us into insolvency or anything.