Duking It Out With Foreign Investors

Guest Post by Willis Eschenbach

The Duke of Edinburgh, the husband of Queen Elizabeth, has spoken out about windmills, and he’s not happy at all. Chris Huhne, the UK Energy Secretary, has said that people who oppose windmills are “curmudgeons and fault-finders”. He finds windmills “elegant” and “beautiful”.

Figure 1. A photo of elegant windmills beautifying the otherwise inelegant, ugly UK countryside. PHOTO SOURCE

The Duke, on the other hand, thinks that windmills are an absolute disgrace. Of course that’s my translation, because being royalty, the Duke would never say something as direct and crude as that. The man who tried to sell His Dukeness the windmills reports on the conversation as follows:

“He said they were absolutely useless, completely reliant on subsidies and an absolute disgrace,” said Mr Wilmar. “I was surprised by his very frank views.”

Hmmm … well, I guess royalty may not be that much different after all. The article continues:

Mr Wilmar said his attempts to argue that onshore wind farms were one of the most cost-effective forms of renewable energy received a fierce response from the Duke.

“He said, ‘You don’t believe in fairy tales do you?’” said Mr Wilmar. “He said that they would never work as they need back-up capacity.”

The Duke won’t abide windmills on his estate. I don’t blame him one bit, I commend his understanding of the situation, and I admire his frankness. The Duke’s eldest son, the Artist Currently Known As Prince, has agreed with the Duke’s position. He won’t allow windmills on his estate either, despite The Artist’s well-known alarmism about CO2. Funny how that works, even royalty believes in NIMBY.

Actually, though, none of that was what caught my eye about the Telegraph article. The part that made my hair stand on end was this throwaway line from just before the end:

Two-thirds of the country’s wind turbines are owned by foreign companies, which are estimated to reap £500 million a year in subsidies.

Yikes! I’m too gobsmacked to even comment on that, other than to say I guess we know how they lost their Empire … not that the US is far behind …

w.

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mike g
November 22, 2011 6:33 am

And, Willis, PRB is just where most of the high quality coal is. As we go deeper and deeper into energy poverty, lower and lower quality coal will be mined and consumed despite the protestations of the alarmist bedwetters.

wws
November 22, 2011 6:38 am

re: coal mines playing out
first, coal mines are *always* playing out and new ones brought on line – how mines from 100 years ago are still online, after all? So that’s just the status quo ante.
BUT – the answer to “What comes after?” is Natural Gas. We have found so many new natural gas reserves in the last 5 years alone that it’s unreal. Here’s a stat that’ll grab you – huge amounts of gas are now being produced as a by-product of the oil-shale drilling going on in the Bakken formation and the Williston basin, North Dakota. The gas is a by-product, not the goal, so it is essentially free (or valueless, depending on how you look at it) to the producers there. North Dakota has no large network of nat gas transmission lines, as older more developed producing areas do, and they are difficult and expensive to put in. (ie, reference the keystone controversy)
Therefore, *Right* *Now*, 30% of ALL the nat gas produced in North Dakota (a huge amount, btw) is being flared off at the wellhead as waste.
30% – that’s enough to power a medium sized city or two year round, and we’re just throwing it away since no one has made it a priority to make use of it. And farther south, Cheniere Energy (symbol LPG) has now gotten approval to liquify nat gas at our cheap prices and ship it to China (among other places) since the demand there is so much higher.
So, although we talk about a resource shortage, we now have so insanely much natural gas already being produced that we are shipping it to China as surplus and burning it off as waste.
Does that make any sense? Does that sound like we have any Real resource shortage at all in this country?

November 22, 2011 7:07 am

Alternative energy sources will continue to be very important for mankind.This is inevitable because of growing demand for energy. Reserves of oil every year more and more reduced.

davidmhoffer
November 22, 2011 7:31 am

Kum Dollison says:
November 22, 2011 at 3:50 am
No, Willis, you are still Misrepresenting what I said. I said, “The Mines Currently Operating, will be played out in 20 years.>>>
Which, as Willis already demonstrated, is a completely misleading statement unto itself.

davidmhoffer
November 22, 2011 7:51 am

JJThoms;
Remember why would Ukraine/canada/etc sell gas to US at a price 50% below what it can sell to europe etc.>>>
The Ukraine sells gas to the U.S.? LOL. They’re an importer of natural gas from Russia.
Last I checked, there was no pipeline from Canada to Europe through which to ship gas.
JJThoms;
davidmhoffer says: (mainly wrong)
Spinning reserve is held for nuclear scrams 1GW in seconds
Wind requires a max of 100MW for a wipe out of a wind farm.
lack of wind conditions develop slowly and can be predicted so no spinning reserve is required>>>
Wow. It would take many paragraphs to explain why that is wrong. Bottom line is that “seconds” doesn’t suffice in many instances, and the ripple effect through the grid can cause major problems at levels far below that required to take the wind farm alone down. It is the speed of reaction to a fluctuation of a given size that becomes the issue. As the percdentage of the total coming from wind increases, the number, magnitude, and speed of incidents that the reserve capacity must respond to also increases. Wind conditions develop slowly? Well sure they do. But fluctuations in the wind conditions happen very very fast and they cannot be predicted at all. Increase reliance on wind, and you increase the possibility of a major outage many times over.
JJThoms;
I should also point out that the cost I gave for wind is over a 10 year period. Extend this to the guarantee period for the turbine (15 years) and the price is less and extend it to the full expected life of currently 20 years (will post figures when I can access spread sheet.)>>>
Fine. How about we go 60 years? Now you have to TRIPLE your capital costs while gas, coal, nuclear all just stay the same because those plants can easily be designed for that kind of a lifetime, and likely more.
JJThoms;
The US is living on borrowed time.>>>
A statement devoid of facts, reasoning, and value. The first sign of an argument that has no wind left in its sails…

Gareth Phillips
November 22, 2011 10:25 am

I don’t think anyone is ever going to get any sense out of Willis. He is unable to engage in discussion without resorting to insults, which he gleefully celebrates. He is the opposite side of the coin to John Cook, but with the same characteristics. Personally (and I would recommend the same path to others) ignore him, but above all don’t be driven from the site by his behaviour. He either has an interesting developmental disorder, or he is supporting the opposition by bringing this site into disrepute. The vast majority of posts in this thread look to me well reasoned, even if I do not agree with them. Willis is unable to see this and can only respond with insults. So don’t get drawn in. Debate the wind/coal/energy issue with others, but when you fight with hogs they love it, but it’s you who gets dirty.
Still, it’s a real pity Willis gets away with it every time. In my time working in forensic psychiatry if I have learned one thing it is this. Ignore the bad and provocative behavior and re-enforce the positive one. Sometimes I forget that rule, but it’s situations like this that remind me how important it is.
As usual moderator I am happy to have this post moderated, but if that happens it is my hope you will be consistent and give the inflammatory posts by Willis the same scrutiny.
As Anthony states in his policies:
Most people wouldn’t be rude, loud, or insulting in somebody’s home or office, I ask for the same level of civility and courtesy here.
Respect is given to those with manners, those without manners that insult others or begin starting flame wars may find their posts deleted.

November 22, 2011 10:28 am

Gareth Phillips says:
“I don’t think anyone is ever going to get any sense out of Willis… He is the opposite side of the coin to John Cook, but with the same characteristics.”
Don’t be ridiculous. Really. You sound idiotic. Willis writes rational, well researched, well thought out articles, and defends them from unthinking critics. On the very few occasions that he has made a mistake, he readily admits it and makes adjustments. OTOH, John Cook is a juvenile cartoonist on the Soros payroll, emitting propaganda that is lapped up by unthinking trolls who get their easily debunked talking points from Cook’s censoring Pseudo-Skeptical Pseudo-Science and attempt to promote them here.
Run along now back to PSPS and preach to the mouth breathers there, who will all nod in unison at any anti-science, catastrophic AGW point of view.

JJThoms
November 22, 2011 10:56 am

Apologies it was the Ukraine that were playing havoc with EU gas but it was gas from Russia passing through Ukraine.
http://www.indexmundi.com/commodities/?commodity=russian-natural-gas
current $434.18 (us) per 1000cu metres
1 mmbtu (what a quaint unit!)=1e6 BTU=28.32 cu metres
http://wtrg.com/daily/gasprice.html
highest price is $4.8 per mmbtu =$169.5 per 1000cu metres
i.e. the EU is paying 2.6 times as much for natural gas as the US.
Perhaps Canda SHOULD look to EU for their gas production. And BNO you do not need a pipe line these will do nicely:
http://en.wikipedia.org/wiki/LNG_carrier
Just found this:
http://www.mongabay.com/images/commodities/charts/chart-ngeu.html
same units but shows over 4 time US price!
Pumping NG through pipes will use about 25% of the energy from the gas!.
Willis “So you can’t even beat the other EU countries, much less the US.”
I am trying to beat no one I am just saying that wind is just about at break even with other forms.
Also in 20 years I simply build a new turbine if nercessat and I again get the same (or less) cost per Unit.
Coal/gas/nuclear need more maintenance but will as you point out last perhaps 60 years. (none past 40 yet!)
I am still waiting for you to break down the full cost per unit (un-subsidised by cheap loans etc.) of nuclear and gas so it is difficult to make a comparison.
I wait

JJThoms
November 22, 2011 11:19 am

davidmhoffer says: November 22, 2011 at 7:51 am
… and the ripple effect through the grid can cause major problems at levels far below that required to take the wind farm alone down. It is the speed of reaction to a fluctuation of a given size that becomes the issue. As the percdentage of the total coming from wind increases, the number, magnitude, and speed of incidents that the reserve capacity must respond to also increases. Wind conditions develop slowly? Well sure they do. But fluctuations in the wind conditions happen very very fast and they cannot be predicted at all. Increase reliance on wind, and you increase the possibility of a major outage many times over”
Read the referenced may 2008 from national grid
http://www.nationalgrid.com/NR/rdonlyres/E19B4740-C056-4795-A567-91725ECF799B/32165/PublicFrequencyDeviationReport.pdf
The UK grid is very robust
many instant providers (how long does it take to fire up a diesel?
Many industries willing to take cheap electricity and accept fast disconnection
greater than 1.3 GW pumped storage giving 12 seconds to full output (Dinorwig)
There is no way that the wind can suddenly cease over the whole of the UK. It will take hours for wind to cease – it will be a progessive shut down requiring response of minutes to days from the generators.
Face it it is a single large scale failure that spinning reserve is for.

TheJollyGreenMan
November 22, 2011 2:22 pm

Hi Willis, I noticed the exchange about the depletion of coal mining reserves. May I add the following to the conversation?
In the investment and corporate world there are specific connotations attached to the term ‘Reserves”. After the Bre-X scandal, http://geology.about.com/cs/mineralogy/a/aa042097.htm where the guys claimed they have more gold in their deposit than the gold in Fort Knox, the mining and investment community had a serious rethink about how mineral resources and ore reserves are calculated and reported in particular to the investment public.
One of the first, and best, guidelines were prepared by the Australasian work group that prepared the well-known and generally most accepted JORC code. http://www.jorc.org/history.asp This Joint Ore Resources Committee prepared a guideline that is updated about once a decade and last I looked is in its fifth revision.
The SEC (Securities Exchange Commission) of the New York Stock Exchange has also published its own guidelines for ore resources and ore reserves reporting. (The reason you don’t have a general guideline that applies to the whole USA may be attributed to Bill Clinton that disbanded the US Bureau of Mines in 1995? Maybe a similar fate should befall the pernicious EPA mob?)
The underlying logic of the codes is very similar. First you outline a mineral deposit with widely spaced drilling and you end up with an Inferred Mineral Resource. If the results are promising you commence with the second round of exploration drilling and during this stage you can step-out to expand the extend of the mineral deposit, trying to establish the outer boundaries, and do some in-fill drilling in-between the previous set of boreholes, to confirm the grade and continuity. Usually you can then end up with a small portion of the deposit that can be classified as a Measured Mineral Resource, where the drilling was most intensive – closely spaced – and a larger part of the deposit that is classified as an Indicated Mineral Resource.
So there you have the start of the technical investigation, a Mineral Resource with decreasing levels of confidence, from Measured – through to Indicated – and lastly Inferred Mineral Resources. The financial and technical guys can start working on a feasibility study. On the technical side you usually have a project geologist, surveyors, rock mechanics engineer, mining engineer, metallurgical engineer, electrical and mechanical engineers, civil engineers reporting to a project manager doing the study. On the financial side you have the corporate finance, procurement and marketing guys beavering away. Once all technical and financial studies are completed you can report a Proven, Probable and Possible Ore Reserves.
For a project to go ahead you would like about one and half times the payback period covered with Proven Reserves. That gives assurances to the lenders that you are able to pay back the initial capital investment. (Keep in mind that is round about the period when the NPV of the project to date is just above zero.) For the balance of the project you would like an equal distribution of Probable and Possible Ore Reserves, the logic being that you want to minimise the front-end-loading of project.
Only a fool would waste money on drilling more than absolutely necessary, to finance and start-up a project. Twenty years is an outside limit for a mining project. Keep in mind that in the case of a captive coal mine (meaning a coal mine tied to a power station) the utility company may ask the mining company to do a study of the total potential mineral deposit contained in a lease area to ensure there is enough feed for the life of the power station and this potential reserves are used for internal consumption only, with no standing on any stock exchange anywhere in the world.
To be able to report a mineral deposit as an ore Reserve costs time and money. It is this factor that all the Peak Oilers and Coal Depletion Scammers don’t want to understand and keep parroting about. The German Engineers, not generally noted for their sense of humour, refer to the Oil Constant, as the current number of years when oil will run out. Since the 1950’s to this day the oil constant is 20 years. The oil and coal constant has a very logic and simple to understand reasoning behind it. Companies extract oil and mine coal to make money, why else bother?

cgh
November 22, 2011 7:33 pm

JJThoms: “I am still waiting for you to break down the full cost per unit (un-subsidised by cheap loans etc.) of nuclear and gas so it is difficult to make a comparison.”
Bruce Power is refurbishing four reactors in Ontario, a $12 billion Cdn. project. Cost of power Bruce is charging for the refurbished reactors? 5.6 cents/kWh.
And just so you understand clearly, Bruce Power is a private company, not a government entity. So that 5.6 cents has to cover all of its current and future costs including fuel disposal and site decomissioning, plus the project and capital costs of the refurbishment.

JJThoms
November 23, 2011 5:42 am

http://www.powerauthority.on.ca/bruce-power-contract-amendment-february-2011
The refurbishment contract with Bruce Power continues to provide good value. A July 2009 contract amendment protects ratepayers from cost overruns – ratepayer exposure is capped at $3.4 billion. This remains unchanged.
Bruce Power received about 6.4 cents per kilowatt-hour for the electricity it generated from Bruce A in 2010, which is 1,500 MW of cost-effective power generation in the province.

JJThoms
November 24, 2011 4:57 am

Willis I know you are trawling through mails looking for that killer quote to take out of context. BUT I have given you some questions and some figures above for which I would like a response, Thanks

JJThoms
November 24, 2011 10:37 am

Come back when you want to play nice, acting like an unpleasant and rather fragrant anus just makes me go elsewhere to play with someone who is a decent human being.

Cripes that is so purile. It is an obvious sign that your argument is lost. I’m surprised you did not bring up the case of Hitler being a vegetarian (which he wasn’t!!!). I have NOT insulted you in any where near your terms.
I will just assume that you have no answer and my point is made.
Wind turbines are on a par with MOST other sources of energy – especially in the UK

jjthom
November 24, 2011 1:09 pm

Willis
PS—to keep people from laughing at you in the future, let me point out that the word is spelled “puerile”.
Thank you willis for mocking my dyslexia. I try to be accurate but the occasional one gets through.
The only possible statement that I could possibly be construed as an insult is:”killer quote to take out of context”
you respond with “an idiot, jerks, asshat, dork” Quite who is insulting whom?
Still waiting for your citation about the US getting a 50% discount on Ukraine gas, once I get that we can resume the discussion</i?.
I gave the reference: US gas is 25% of EU gas price
I asked for a breakdown of costs for coal/nuclear
I got nothing
I do not make childish apologies for words I have said unless they are shown to be in error.
So we leave it here. I wonder who looks the biggest idiot?

TheJollyGreenMan
November 24, 2011 1:11 pm

Willis, I admire your restraint.
Firstly, we know the Dutch energy firms are on the run, they are in trouble in Germany and the Netherlands where people are questioning the ever increasing price of electricity.
http://www.reuters.com/article/2011/11/16/us-dutch-wind-idUSTRE7AF1JM20111116
And we know that public opinion is turning against the cost of SAVING THE PLANET in the UK.
http://www.telegraph.co.uk/comment/telegraph-view/8901282/The-Duke-of-Edinburgh-sees-clearly-over-wind-turbines.html#disqus_thread
The Duke of Edinburgh, a decorated Naval officer of WWII, has a lot of support and this Dutch snide that snitched is in trouble.

jjthom
November 24, 2011 2:02 pm

TheJollyGreenMan says: November 24, 2011 at 1:11 pm
http://2.bp.blogspot.com/-sl_1Q-0v_G8/Ts67N4x4QXI/AAAAAAAAAMU/WJPqNu9caOE/s640/current+fuel+price+indices.png
check this and tell me where the electricity price suddenly jump or slowly move up due to GREEN taxes. It looks to me as if primary fuels track electricity rather well.

TheJollyGreenMan
Reply to  jjthom
November 24, 2011 2:33 pm

Gaan Kak!

Macbeth
November 24, 2011 5:05 pm

Whats really a disgrace is that the skeptic community wont drop the logical fallacy of ‘windmills spoil the countryside/look ugly’. You really do discredit the effort with this foolishness. Compare and contrast the picture in this article by entering “coal plant station uk” into Google Image search.

jjthom
November 25, 2011 3:46 pm

I promised you this so here it is:
15 year wind turbine kWh cost
build £889,650.00 install
planning etc £434,583.00 install
maintenance 0.0055 perkwh
maintenance/year for delivered 280kwh £562.49 per year
routine expenses £30,000.00 per year
rating 1000 kwh
load factor 28%
deliverd power 280 kwh
Balancing Cost £0.014 per kWh
Short term Reserve £0.007 per kWh
total install cost= £1,324,233.00
install cost/delivered kwh £4,729.40
conventional backup costs/year £51,544.08 per 280 kWh/year
running cost/year £82,106.57 per 280 kWh/year
over n years 15
total install over 15 yrs £1,324,233.00
running cost over 15 yrs £1,231,598.48
total cost over 15 yrs £2,555,831.48
power generated over 15 yrs 36817200 kWh
cost per kwh over 15 yrs £0.069 per kWh
cost per kwh over 20 yrs £0.060 per kWh
cost per kwh over 10 yrs £0.087 per kWh

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