Captive Clients Determine the Success of Energy Initiatives

Guest post by Tom Fuller

Something went terribly wrong with wind power. Preached to us all as a solution to climate change, it fell apart in one year. Some have blamed it all on the recession, ignoring the fact that other renewable energy sources and energy efficiency strategies have continued to grow.

I say it’s the business model. Wind power companies sell either to utilities or governments. There is insufficient pressure on them to lower costs–and indeed, during wind power’s moment of glory last year, prices went up 9%. Wind power companies are almost all divisions of large conglomerates, such as GE, or energy distributors such as utilties themselves. Wind power for some providers seems like a vanity entry into a PR sweepstakes–but there is no scope for reducing margins or searching frantically for innovative cost reductions.

And so their moment has passed, maybe permanently. While wind power tried to dictate terms to their captive clients (too often successfully), the cost of solar power and natural gas continued to fall, to the point where nobody could make a straight-faced case for wind as a competitive technology, and certainly not the offshore wind farms that are the new rage. Rage as in what customers will feel when they see their bills…

It hasn’t helped that the inefficiency of wind’s performance has been gleefully highlighted by those opposed to its expansion. If a turbine says it will give you 1 MW of electricity, you can only count on about a quarter of that being delivered. Maintenance issues are real, as are complaints about noise and bird kills. And they do take up a lot of space.

Contrast that with solar power companies. There are a lot more manufacturers, and they are increasing capacity continuously. Each new generation of fab provides 20% performance gains, and the next generation of wafers is longer, wider, thinner and less likely to break. Innovations for their balance of system peripherals come from a variety of outside companies in their supply chain, and the inexorable march to grid parity is nearing its goal.

They both get the same level of subsidies, which amount to a pittance overall. So what’s the difference?

Solar sells to consumers, too. Residential, small business, offices and plants. Solar scales down as well as up. And their customers are you and me–cranky and demanding if things don’t work, unwilling to sign long term contracts, wanting to see bottom line improvements rather than brochures showing acres of installations.

So solar will win. Not because they’re nicer guys, but because their industry is more fragmented and they have more demanding customers.

Which, I believe, is the way the system is supposed to work.

So, although government is not good at picking winners, it can identify losers, and should do so forthwith. Wind power sales have fallen through the floor this year, but the DOE should be making pretty stern announcements about price performance failures in the wind industry, and pointing out the advantages of alternatives to alternative power–not just solar.

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October 14, 2010 1:37 am

Ric Werme says: October 13, 2010 at 11:09 pm
Well, it looks like Google is finding religion and T. Boone Pickens is looking for love in some other place. … Earlier this year, we saw Texas oil billionaire T. Boone Pickens de-emphasize the wind portion of his Pickens’ Plan to rid the U.S. from dependence on Middle Eastern oil. The plan, which initially allotted for the country’s largest wind farm on the Texas panhandle, hit headwinds when a lack of transmission infrastructure was available to bring energy from the remote turbines to population centers where it is most needed.

Pickens was never interested in wind. He just wanted to sell water to north Texas cities. He bought up a huge amount of water rights in the Panhandle, and the wind farm was just a diversionary scheme. Once he had a right-0f-way ( transmission infrastructure) for his politically correct windmills, he could use it for his water pipeline. Folks had him figured out, though.

Frank
October 14, 2010 1:44 am

Large scale energy production using wind power delivered over the grid doesn’t work. Wind power is good for personal power generation and for specific purposes, like generation of alternative fuel for vehicles.

October 14, 2010 1:46 am

Wind is the occasional power producer, as is wave since waves depend on the wind. Tidal is fine but vulnerable to storms and solar does not work at night which leaves the old faithfuls coal, oil and nuclear. I want 24/7 reliable power and it is the old faithfuls which provide this!

Frank
October 14, 2010 1:52 am

Solar power is no good either up here in the cold north where the days are short in the winter.

Frank
October 14, 2010 1:59 am

W^L+ says:
October 13, 2010 at 11:17 pm
“It seems to me that the future of alternative energy is in the individual home and business, not in centralized generation facilities. Big utilities (and big government) don’t like that concept, because ultimately, it could reduce the need for their existence.”
I totally agree.

Patrick
October 14, 2010 2:10 am

Hi
I cannot understand how rational people can still believe that their toy windmills can produce any reliable significant amount of electricity.
I have just looked at the quantity of electricity produced in the UK from the http://www.bmreports.com website:-
Windpower
Last 30 minutes 130Mw
Last 24 hours (10:00-10:00) 3749 Mwh (0.4% of total generated by all means)
This is from an installed base of 5 Gw capacity (from the renewable website news release 25th September.
I make that a windmill efficiency ratio of 3.1%
regards
Patrick

Alan the Brit
October 14, 2010 2:11 am

I am not convinced about solar, & certainly not about wind power, it’s only good for the green bunnies over short periods. I have no central heating, I was made redundant during the last recession in the early 90s & all the money had to go on surviving as best we could & finishing off or barn conversion, (if such an objective is ever “finished”), so during the last bout of Global Warming & Climate Disruption earlier in the year when we lost electric power for almost two days, as did much of the country at various stages, we managed on 3 portable gas stoves, the log-burner, & more importantly the oil-fired Aga so we had plenty of hot water, & could still cook our meals by lamp-light, oh & put a sweater on, but then I am rather old fashioned in that department! Even those neighbours on LPG went cold because they needed electricity to fire up the burners! Don’t put all your eggs in one basket when you live in the sticks in the UK!

Tim Williams
October 14, 2010 2:21 am

Gosh, who to believe eh?
On the one hand we have
http://www.windpower.org/download/541/DanishWindPower_Export_and_Cost.pdf
Written by a group of ‘energy researchers and experts from Danish universities and independent consultants’.
Who conclude that the CEPOS report was well….utter rubbish.
While on the other hand we have the CEPOS report .
http://www.cepos.dk/fileadmin/user_upload/Arkiv/PDF/Wind_energy_-_the_case_of_Denmark.pdf
eminating from the “Center for Political Studies” (http://www.cepos.dk/cms/index.php?id=114)
Written by a ‘think tank’ founded in 2004 by ‘prominent Danish buisness people’ who want to ‘contribute to more personal and economic freedom, rule of law and democracy as well as a limited government sustained by healthy civil institutions such as family, civil associations and cultural life.’
An institution that “wishes to reform and limit direct and indirect economic support from the public authorities to the population.”
Both reports are persuasive, but I’m inclined to give more credence to the Aalborg University report that systematically rebuts the specific assertions made by ‘CEPOS’.
Of course the CEPOS report has done a world tour and recieved far greater exposure. Wonder why?
As for the bird shredding and views (http://193.88.185.141/Graphics/Publikationer/Havvindmoeller/havvindmoellebog_nov_2006_skrm.pdf) it may not be all bad.
“Danish experience from the past 15 years shows that offshore wind farms, if
placed right, can be engineered and operated without signifi cant damage to
the marine environment and vulnerable species.”
Yeah, yeah all part of the plot…

October 14, 2010 2:22 am

I used to install solar thermal systems on peoples’ houses, and I can say that they do work. They are about 55% efficient, and have a payback period of about ten years with a 25% subsidy. Sadly, the paperwork required to get this subsidy sucked every bit of joy out of doing it.
There’s a chap called Hugh Piggott who runs courses on how to make home sized wind turbines for around $500 using parts that you either make yourself or get from a junkyard. However, the space you need for these (1.5 times their height all around) make them impractical for anyone living in a city. It’s definitely one of those things I want to do before I die.
Something I’m also keeping my eye on is this, a gas fired boiler that runs a stirling engine for electricity. What I love about this sort of thing is that it puts the power (no pun intended) in the hands of people.
Just as a by the by, the biggest bang for the buck is to insulate your home. It has the shortest pay back time, and there really is a notable difference.

MarkR
October 14, 2010 2:28 am

Thanet offshore wind farm – 780 million GBP for 300 MW.
Whitelee onshore wind farm – 300 million GBP for 322 MW.
Waldpolenz solar park – 130 million EUR for 40 MW.
Waldpolenz capacity factor – <12%
Average UK wind farm capacity factor in 2008 – 29%
It should also be noted that Waldpolenz was built with CdTe, which is cheaper to process than Si, but tellurium is currently a serious problem in terms of large scale supply.
Both solar and wind are very promising, and huge improvements have been made in both. I did my masters working in a CdTe research lab, but it's my opinion that solar is inappropriate in the UK and wind is the answer.
This probably explains why the subsidy wind farms get is indirect and a MAXIMUM of about 4 p/kWh, whilst home solar panels are given a sickening 41.3 p/kWh. With subsidies you get 10 times as much wind power as you do solar, and that probably explains why there are many times more GW of wind installed, and why wind is being installed more quickly and there will be more wind than solar power for years to come.

Manfred
October 14, 2010 2:28 am

I can’t agree with this article.
There is now way that photovolatics can compete with wind energy.
PV is kept alive by the extremely stupid und costly German subsidies, financing more than half of the world market.
The payments per kWh are much higher for solar than for wind energy because it is so much more expensive, trying to inverse or ridicule the laws of economics.
The obligations for an energy contribution of currently around 1% already amount to around 100 Billion Euros.
This subsidy certainly has produced a significant number of jobs in China, but in Germany much more jobs are lost than generated due to the horrific cost at almost no gain. Consumers pay over 30 cent / kWh for PV generated energy, while the gain in saving fuel of nuclear or coal power plants is around 1 cent / kWh. No single power plant can be replaced with PV, no transmission line, nothing.
Solar thermal energy, however may be another story, because heat may be stored much easier than electricity, making these power plants suitable for low tech water heating and real 24 hours power plants.

steveta_uk
October 14, 2010 2:28 am

Channel 4 (UK) last night had an episode of “Grand Designs” featuring an extraordinarily over-engineered eco-bungalow that some eejit had built early last year.
It featured a 30-ft+ tall wind turbine in the garden that was a hideous eye-sore and resulted in many complaints from locals, but since it is eco-friendly the planning authorities let it go.
So Kevin (the presenter) revisits the house after a year, and is told they’ve not got a drop of power from it in that time. Initially the design had a big gear box to increase the spin speed of the generator, but this just sapped all the power and it wouldn’t spin.
So that was removed, and now it spins so fast with a little breeze that the tower oscillates and sounds like it is going to collapse, so it is permanently disabled.
The poor owner was saying how you’d never want to ruin your garden with this monstrosity unless it was really worth it (he did NOT think it looked cool), and this one clearly wasn’t.

Eric (skeptic)
October 14, 2010 2:30 am

rberteig said: “Since the peak load is still broad daylight, you don’t even need batteries to save money here.” Not really, see http://www.caiso.com/outlook/outlook.html
Tom: a bit one-sided, you think? Thomas: keep these posts coming!

Les Francis
October 14, 2010 2:39 am

Some time ago Anthony posted an article from a CEO of a major power supply company (From Utah if I’m not mistaken).
In that article he stated that alternate power sources currently make up less then 1% of total U.S. supply. Time taken to double these alternate supplies output will not stop the advancement of conventional production. The consumption always goes up.
Even if you triple, quadruple etc the alternate power supply industry they will still make up less than 1% of total output.
Consumer solar power has had massive government subsidization in Australia for very little gain. Household solar installations were also supposed to be amortized by the power companies paying you back for supplying excess solar power back into the grid. In practice the power companies seem to be stalling on the payback scheme.
The government green stimulus measures taken in Australia are all turning into a massive waste of funds (Billions of dollars) and rorts.

morgo
October 14, 2010 2:49 am

I have just been touring Italy and most of the wind farms I saw at lease 1/3 of each farm where not working I was told thay had broken down either burnt out .bearings shot or have been struck by lightning.

simpleseekeraftertruth
October 14, 2010 2:51 am

And the BIG question to ask & keep asking is;
How much CO2 emmission reduction has been acheived by any nation that has adopted wind/solar?
That was the purpose remember: to reduce ‘carbon’ emmissions. Not to change power generation methods to feel good, not because wind/sun is free, not because coal is exhausted, not because nuclear is dangerous, but to reduce ‘harmfull’ CO2. So how are we doing on that? Anyone seen an answer anywhere because I can’t find one.

Latimer Alder
October 14, 2010 2:52 am

We had (by our standards) a very cold spell in UK in winter last year which lasted about three weeks. Demand for electricity to sustain the necessities of life was at a maximum.
The cause of the cold spell was a big stationary anticyclone sitting over the British Isles. It is a characteristic of these that there is very little wind – it is ‘quiet but very cold’ weather.
The contribution that all the installed windmills was able to make to our national energy needs was negative. For windmills require electricity to power them (a motor is just a generator running backwards) to keep the bearings from seizing if there is no wind.
That anybody – Greenpeace or not – can seriously contemplate running an advanced economy on such a disadvantaged power source astonishes me. That GP is populated by buffoons has long been apparent..but the gullibility of our politicians and policy makers is frightening.
The one thing to remember about windmills is that they don’t do what it says on the tin.

Kum Dollison
October 14, 2010 3:00 am

Imagine a coal train stretching from the East Coast to Oklahoma City. That’s how much coal China uses. Every Day.
Now, a coal train from Chicago to Memphis. That’s how much coal the U.S. uses Every Day.
We haven’t gotten to South Korea, Europe, Canada, Mexico, India, or Africa, yet.
It’s not going to last forever, folks. We’ve already used all of our Anthracite in the U.S. Now we’re using much less energy-dense fuels.
Wind is cheaper than Nuclear, and Solar will be considerably less in a few years (it’s, roughly, at parity, now.)
As for you guys in the fossil fuel business: don’t worry. Depletion is going to put you out of business well before alternative energies do.

Harold Pierce Jr
October 14, 2010 3:02 am

If Mercedes=Benz built a wind mill farm, could they write off cost against there ad budeget?

Craig Goodrich
October 14, 2010 3:03 am

Tom says (October 13, 2010 at 11:00 pm) wind is just lovely.
Rubbish.

Brian Williams
October 14, 2010 3:16 am

Typically, however, HMG UK will continue to back a dead horse. Look forward to us making huge investments while everyone else pulls out. It seems that our fortunate location for a financial sector makes politicians think we understand about good investments…

Chris Wright
October 14, 2010 3:18 am

Wind power only works when the wind blows. Solar power only works during the day. So what will happen on windless nights?
Let’s just say you’re going to need a lot of candles!
It’s sad we’re wasting tome and resources on such nonsense. Our UK government is completely mad with their plans to convert much of our country’s power generation to wind. This may be news to these idiots, but there are long periods when wind generation for the entire UK falls to nearly zero. I suspect they are planning to squander roughly a trillion pounds simply in order to show how wonderfully green they are.
In the cloudy UK, with short winter days, solar makes little more sense.
To be honest, I think the idea of renewables in general is pretty pointless. Compared to conventional power stations, renewable power sources are very expensive and unreliable. All they will achieve is much more expensive energy – and regular power cuts.
This is the 21st century, if anyone hadn’t noticed. We should be able to generate all the cheap energy we need. We should try to be reasonably efficient, but we shouldn’t be promoting the need to cut energy consumption to almost a religion.
And of course we can do it, with nuclear and clean coal in developing countries. The real problem comes from the green fanatics such as Greenpeace and WWF. They’re the real threat to the world.
Chris

wayne Job
October 14, 2010 3:30 am

Wind power is a crock and always will be, balancing the grid is a nightmare and over 10% wind power in a grid, an accident waiting to happen. When all these new generation efficient impellors are decommissioned as useless, they can then be recycled into something useful. Perfect for driving pumps for water, into storage to run peak power hydro.
Thus the problem of variable wind is eliminated and the power available when needed.
Recycle the expensive and energy intensive dynamo’s and convert to mechanical reliable pumps.
Solar for peak or base load is like wise pie in the sky until they convert at least half of the suns energy falling on them into power. Then only on the most propitious days.

Golf Charley
October 14, 2010 3:42 am

Kate
How would that figure for growing demand look, if the UK had not been building the largest wind farm off the coast of Kent. UK tax payers are going to be saddled with subsidising this junk science for years to come, and most of the investment went to foreign companies, as our own windmill factories got closed down due to lack of demand.
Is it wrong to enjoy looking at photos of these wretched beasts self destructing?

David L
October 14, 2010 3:58 am

Read the history books about wind power. As soon as better energy sources were found (hydro., coal, steam, gas, even wood gassification) wind power went out the window. It’s heyday was Don Quixote. Texts during the 19th century lamented the variable and uncertain nature of wind. That’s the essence of why it will never be a standard energy source.