Guest Post by David Middleton
Going Green
Offshore Wind Passes in Senate, Gov. O’Malley’s Signature Next
The construction of a wind power farm off the coast of Ocean City could begin as early at 2017
By Jessica Wilde, Capital News Service
Gov. Martin O’Malley’s offshore wind energy bill is on its way to his desk for a signature, having passed in the House in February and in the Senate on Friday.
Five friendly Senate amendments are expected to be approved easily by the House.
The new legislation will funnel $1.7 billion of ratepayer subsidies over a 20-year period toward the construction of a wind power farm 10 to 30 miles off the coast of Ocean City as early as 2017.
“It’s about a better Maryland for tomorrow,” said Sen. James Mathias Jr., D-Worcester, the former mayor of Ocean City, who changed his vote to support the bill.
O’Malley’s previous two attempts to push the legislation—the first more ambitious —never made it to the Senate floor largely because of concerns about the cost to Marylanders.
His first initiative also failed because utility companies would have had to make nearly 20-year commitments to buy offshore wind energy.
[…]
Offshore wind is, by far, the most expensive source of electricity. An offshore wind farm would have to receive 34¢/kWh, wholesale, just to break even over a typical 30-yr plant lifetime. 34¢/kWh is almost three times the average retail residential electricity rate in the U.S.
The much ballyhooed Cape Wind project, off Cape Cod, is projected to have a 454 MW installed capacity. It will cost approximately $2.5 billion to build. This works out to $5,506,608 per MW. A natural gas plant generally costs less than $900,000 per MW.
Cape Wind currently has a long-term contract to sell half its output for 18.7¢/kWh. The average U.S. residential rate is in the neighborhood of 12¢/kWh.
Maryland has come up with a novel solution to make offshore wind more affordable to consumers…
Opinion: Local Editorial
Martin O’Malley’s wind-power welfare
If offshore wind energy were the way of the future, government would not have to subsidize it at all, let alone to the tune of $1.7 billion.
Maryland Gov. Martin O’Malley, D, justifies the subsidy he will soon provide to offshore wind based on the industry’s enormous upfront costs. He routinely fails to mention that investors routinely swallow large upfront costs to get a piece of industries that promise future profits. In the case of offshore wind, because the industry is not so promising, investors would never back it without O’Malley’s massive pre-emptive government bailout.
O’Malley is campaigning already for the Democratic presidential nomination in 2016. This is the real reason behind the wind power subsidies he will soon sign into law. It is a sad reflection on the integrity of Democrats in the state legislature that they have rubber-stamped O’Malley’s latest corporate welfare plan. Although Marylanders will pay only a small additional amount on average — about $1.50 per month for residential customers, and a 1.5 percent surcharge on Maryland businesses — every penny is being directed to businesses that have O’Malley’s ear. By diffusing the costs of highly concentrated benefits, O’Malley has found a way to squeeze ordinary residents of his state even further than they are currently squeezed, enrich a few wealthy developers, and come off looking like some kind of environmentalist hero.
[…]
$1.7 billion in taxpayer-funded subsidies divided by 200 MW works out to $8.5 million worth of SUBSIDIES per MW of installed capacity!!!
They could build a 200 MW solar PV plant for less than the cost of the subsidies!
They could build 2,000 MW of natural gas-powered generating capacity for the cost of just the subsidies… 
200MW Of Offshore Wind Blowing This Way
The exact percentage of state electricity sales that must be met by offshore wind under the state RPS will be determined annually by state regulators, and will be based on the creation of “offshore wind renewable energy credits” (ORECs).
Roughly 200 megawatts (MW) of offshore wind capacity will likely be built as a direct result of the bill, and Governor O’Malley has previously said 40 turbines will be built about 10 miles off the coastline, creating 850 green jobs.
[…]
Read more at http://cleantechnica.com/2013/03/08/…z0tBdmufETJ.99
The $1.7 billion subsidy will be paid out over 20 years… $85 million per year… $100,000 per year per green job created ($2 million per green job)… 
And this is just the cost of the SUBSIDY!!!
At 12¢/kWh and a 38% capacity factor, the Maryland offshore wind farm would generate about $80 million per year in gross revenue. The levelized generation cost (LCOE) would run about $226 million per year.
So, you will have an investment that could never pay itself off or even cover half its LCOE at market prices.
For this monstrosity to break even, with the subsidy, Maryland electricity consumers will have to pay 17¢/kWh.
Maryland taxpayers will have to cover 17¢/kWh, so that Maryland’s electricity consumers will only have to pay 17¢/kWh (assuming that the power company is a non-profit). I guess this will only be a burden on the Marylanders who both consume electricity and pay taxes.
Our Department of Energy recently agreed to spend $169 million more of the taxpayers’ money to subsidize similar boondoggles.
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… creating 850 green jobs….
Our experience in Europe is that this sort of thing:
1 – creates a few hundred jobs in China
2 – maintains several jobs in an importing and assembling facility in Europe
3 – puts a lot of money in a few international entrepreneurs’ pockets
The entrepreneurs tend to be based in Switzerland or the Caymans – but they will have New York, Paris and London flats, so you can claim that some of the money is coming back into the country…
MA folks are all masochists.
A real shame MA and CA can’t be moved adjacent to one another.
I wonder how many windmills would have been left if they had been built before Sandy came along, not to mention the earlier much stronger storms.
Also I can’t remember off hand what the sea bed is like off Sandy Hook, but if the name means anything I’ll be interested to see how far down the piling for the bases goes. Our local ones are already having tidal scouring problems round the bases and they’ve only been up a couple of years.
We’ve found them useful at the sailing club as visual navigational aids when we lay the racing marks at the beginning of the season, though.
The cupidity of our politicians is directly proportional to the ignorance and stupidity of our voters.
Somewhat off-topic, but energy related, see
http://www.telegraph.co.uk/finance/newsbysector/energy/9924836/Japan-cracks-seabed-ice-gas-in-dramatic-leap-for-global-energy.html
If this can be extracted safely, then burning methane produces less CO2 than either coal or natural gas, and hence for those that are concerned about the possible effect of CO2 emissions on global climate, extracting this source of energy should be high at the top of the list of cleaner energy solutions.
Here’s a broadcast documentary on wind power from February I just noticed yesterday. The best stuff starts at about twenty one minutes. They talk about the only fully peer reviewed study on health effects of wind turbine noise, and do a demonstration of low frequency modulation on sound.
Wind Rush
http://youtu.be/JiCQabGuKFk?t=21m9s
….and if you factor in the diminishing energy return on older turbines after several years at sea, it will be even more eye-wateringly expensive. Welcome to Europe, Maryland, and all its bonkers energy policies.
I would bet the house that building these monstrosities to withstand hurricanes and tropical storms is going to be a challenge – and even more expensive than envisaged
The windmills are a ideological power symbol for leftist faubians/cultural revolution elite as churches are a symbol of religious power for religions?
Such a shame.
My family and I really enjoyed our vacations in Ocean City.
We will need to find somewhere further down the coast from now on.
Thats a further several thousand dollars a year they can add to the cost of this nonsense.
Call it an experiment in measuring the wind off the Northeast for climate change modeling and the money shall flow…
It would be enlightening to make a documentary that shows how much green and insider money/influence is spent to shove green subsidies down the tax payer’s and rate payer’s collective throat. “Follow the money” would be fascinating. And, unlike “Gasland” and “GLB” it could be factual.
A kludgey legerdemain, foisted on us by a quorum of , illusionary , self righteous, sanctimonious prestidigitator’s
If you want to observe the generating capacity of wind farms check out this site – here’s what Australia’s wind farms produced yesterday
http://windfarmperformance.info/?date=2013-02-12
With the number of major storms that run up the coast they will be lucky to even get these things built, much less keep them running.
As a resident of the UK, with all our money wasting wind turbines, I sympathize with those who will be unable to afford this ludicrous method of electricity generation. Go buy a home generator it will be cheaper to run and you get power when you want not when the wind blows.
‘…A typical 30-year plant lifetime…’ 10-30 miles offshore..??
Not a cat-in-hell’s chance.
Denmark (with some of the best offshore history information – and much more ‘benign’ sea conditions) is recording ACTUAL turbine life of 7-12 years. After that all you get is a load of shipping hazards…
Clearly Maryland politicians suffer from the same delusions as ours this side of the pond…
Poor Maryland. Shows that responsiblity is gone with the wind. Its not too hard to understand that run-away electricity costs will cost jobs. Lucky US is having cheap natural gas – having the potential to end this stupidity … in years from now. So much money borrowed from future generations wasted. Maryland may ask for Federal support then. Great plan, and lots of possibilities to capture some money on its way down.
Over here in Germany we start to feel the enormous cost burden this brings to cosumer and companies.
Its not that there are not enough problems on the European table here, but the same green lobby pushing their issues aggressively and the bureaucracy is growing. Welcome to the club, fellow American friends.
Matt
Anthropogenic Global Warming is easily surpassed by Anthropgenic Global Stupidity.
Cape Wind also has automatic 3% annual cost increases for 20 years built into the contract – despite starting at 3X market wholesale rates. The rate payers are forced to pay. This corrupt contract was forced by politicians who wanted a ‘green’ feather in their cap. Also, Cape Wind receives federal and state tax subsidies and a no bid $0 lease of the site. Crazy.
Let’s be clear about power “capacity.” That refers to the MAX amount of power that a generation
facility can produce, not how much it can produce. If the winds are strong enough to provide
38% capacity, then that wind farm would be the equivalent of a 76MW conventional plant.
That farm will produce roughly 1.5 percent of Maryland’s power. It’s insignificant.
And exactly how long are those 850 green jobs going to last?
On a brighter, more intelligent note, two days ago in South Carolina the first concrete was poured for Summer Unit 2, a Westinghouse AP1000 nuclear plant with a capacity of 1180 MW, providing that power over 95% of the time. Two more plants have been approved and will be built,providing South Carolina with by far the most emission-free power in the US – over 85%, all nuclear. No wind, no solar. No BS and no high electric prices. Maryland produces over 50% of its
power burning coal. At O’Mally’s rate of progress, the future of Maryland power is coal.
“Cape Wind currently has a long-term contract to sell half its output for 18.7¢/kWh. The average U.S. residential rate is in the neighborhood of 12¢/kWh.”
You are comparing capewind’s wholesale charge to the grid to the retail (including distribution). For a fair comparison, you need to compare wholesale to wholesale and then capewind looks even worse (about 3X).
The optimism of the longevity of these things just boggles the mind. But, then, I have a friend who just installed (heavily subsidized) solar panels guaranteed to last 50 years, and expected to last 150 years. I’m not buying any of it. None of this stuff will last anywhere near that long in working condition.
“The good news is that the sooner they fail, the shorter time that electricity consumers will have to pay the ridiculously high prices for the meagre amount of electricity they might produce.”
Hummmmmm. You really have no idea how corrupt governments and their syncophants work.The taxpayer will pay for this for the full 30 years(and probably longer as costs go up). Once that $0.34 rate is in,it is in. No government in the world has ever truly reduced a tax.What they mark down with one hand,they raise something else with the other.
BTW….anybody know if this will affect the Kennedy clan’s view??
The ratepayers resident in the Sovereign Socialist People’s Republic of Maryland might as well write checks directly payable to Commissar O’Malley’s campaign contributors.