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.
@Ben Klijn, “Frankly, my dear, I don’t give a damn.” Rhett Butler to Scarlet O’Hara in Gone With The Wind from 1939, and still they will not learn. RESET, MOLON LABE
I have seen the same all across Africa. Huge factories standing empty. Huge roads leading to nowhere. You can be ABSOLUTELY sure that certain people will gain personally from this madness. Large construction projects are nice juicy targets for graft and personally enriching the bureaucrats.
Of course, it will not be obvious who is on the take or how the scheme works – but rest assured when it seems mad to everyone else there are some who “get it” and will retire immensely wealthy.
Wind power on land is stupid. Wind power offshore is beyond stupid.
As soon as O’Malley has his windmills, he will be able to turn off the Calvert Cliffs nuclear power station. Perhaps he can then sing a song about his success, by candle-light. (He has quite a successful band, by the way).
Someone who is involved in the renewable industry in Maryland said the offshore wind farm in Maryland will never happen because the utility payback will never cover the utility company’s cost of installation and operation, i.e. the formula does not work and no one will take it. I hope he is right.
Well, I am no sure of what will happen, but recently I was skiing in West Virginia and as I drove up Mount Storm, where the wind turbines cover the mountain top, perhaps 35% of all the wind blades were not turning. I assume this is because there was a failure, and this project is not all that old.
And when they get their next Atlantic seaboard hurricane? How will their precious little windmills hold up?
If a generator breaks, its cheaper to walk down the hall (at the power plant) to fix it, than to drive/fly to the coast, get in a boat, chug out to the windmill (assuming the waves/weather allow), etc. Not to mention the extra wear and tear of the outdoor environment on the hardware.
The likelihood of immense cost ineffectiveness of off-shore windmills (vs on-shore power) should be self evident to any engineer. So, are the people pushing this “liars or fools”?
From a structural dynamics view, the foundations for these units will be a challenge to install and maintain. I suspect that the Corps of Engineers and Coast Guard will have some review process and the State of Maryland / Developer application will be a contentious issue. . These foundations will be a attraction for marine life and fisherman and at the same time pose a hazard for the Atlantic flyway and maritime interests. Don’t hold your breath for 2016.
Ian says:
March 13, 2013 at 1:37 am
“wind passes in senate”…yes I can believe that part of the first sentence!!! LOL!
OMG Ian, you have nailed it. ROFL
It looks like the chart has switched the colors for “Fixed O&M” and “Levelized Capital Cost”. Wind and solar have high capital costs but allegedly low O&M costs, aka ‘free energy’.
Is it true that climategate FOIA has released the password? Tom Nelson just posted something.
I’m all for letting these little enclaves of Lefty theology fall as far down the rabbit hole as they can go.
This is one reason my wife and I are moving out of Maryland. I can’t wait to hear the O’Malley voter base (Maryland’s welfare recipients) crying about not being able to pay their electric bills. However, on the positive side, the wind turbines will provide good fishing and diving structures when the first really good hurricane knocks them over.
You can’t neglect the fact that while the intial capacity factor of an offshore windfarm is initially higher that that of a typical onshore one, that factor goes down fast after a few years as shown in the study The Performance of Wind Farms in the United Kingdom and Denmark by Gordon Hughes. High winds and salt tends to wreak havoc on the internals of windmills and the maintenance costs are much higher than on land. Combined with the fact that towers are also subject to the “attacks” of strong waves and you have all the ingredients of a financial and environmental fiasco. Market forces and financial realities will eventually bring an end to all of this but at a high cost for us tax and rate payers.
Isn’t it interesting that in the age where (almost) everything can be found out at the push of a button, such expensive, focused government grants that make neither economic nor technological sense can breeze their way through without some voter revolt?
There is a pervasive sense that “government” money is extra money, perhaps left by a relative of the Tooth Fairy. Government money is money that hard-working citizens make that they have taken from them by force of law. Not money that is cheerfully donated.
All government money should be viewed as money taxpayers WANT to give to get services they want. If this project were put to a referendum, would the citizens of Maryland approve it? I think not.
We/you need some mechanism to rein these fellows in. Perhaps if they appeared in public the way they think of themselves, in powdered wigs, puffy shirts, tight pants with silver-buckled shoes, with a pinch of snuff about to go up their noses, we’d understand who was handling our money.
What’s this?
“Climategate 3.0
This message from FOIA was forwarded to me”
http://bishophill.squarespace.com/blog/2013/3/13/climategate-30.html
David says:
March 13, 2013 at 5:36 am
‘…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…
I don’t think the politicians are deluded at all. They are as aware as everyone else that this is a boondoggle that they can use to pass taxpayer money to friends and associates (and in UK often other politicians – Gummer( Deben) Yeo, Cameron all with snouts in the trough).
All the windfarms have to do is stay in place until the NIMTO limit that all politicians use. Not In My Term of Office – I will be out of office enjoying the benefits of whatever boondoggles I authorized and the failures of the policy will be ‘owned’ by my successors. Correctly contracted the successors may even have to continue to fund the failing boondoggles as the contracts will be written that way to profit their predecessor. Another example from UK: the Public Private Finance Initiatives in UK that have turned into wildly successful contracts for the private companies and continuing uncancellable nightmares for the government – that was not accidental. Maryland taxpayers will still be paying these subsidies when the windmills are corroding stumps in 30 years time because the contract will be written to be independent of the amount of electricity provided. But when they first start noticeably failing NIMTO will have passed so nobody will be accountable.
.
$8.5 million in subsidies per MW of installed capacity??
Since windelecs (wind turbines) only generate for 25% of the time, the actual subsidy is $34 million per MW.
C’mon, let’s not be so pessimistic. As Kevin Trenberth has so knowingly informed us, CAGW will result in more, and more severe hurricanes. So, by replacing fossil fuel electrical generation with wind powered electrical generation we won’t have to worry about CO2 induced CAGW hurricanes smashing those offshore wind farms to smithereens. That is, however, assuming that hurricanes, CAGW or not, don’t smash them to smithereens before…um…uh…ok, there is reason to be pessimistic after all.
Come to think of it, I guess there’s even more reason to be pessimistic. I mean, couldn’t we at least try to emulate the ancient Egyptians and build temples that future generations, 2,000 years from now, might actually respect, rather than bend over laughing. Wind farms are, after all, nothing but temples to environmentalism. It’s not like they’re practical. Let’s consider what they’ll think when they excavate acres, and acres, and acres of these stupid things, on land and sea: “Our ancestors really did this?!”
As long as they can put it where Ted Kennedy HAS to see it!
Think positive! I will be a massive pull for …
Tourism.
Come to Ocean City Maryland
– See the least efficient electricity generating plant in the US, if not the world.
– See the USA’s most costly $/MW generating plant.
– See the USA’s worst eyesore in water.
– See the USA’s biggest potential man-made storm hazard.
– See the US biggest maintenance hazard of modern times but green job have been created
– Engage with the local people that didn’t paid for all this.
As a life-long Maryland resident, I can only face-palm my embarrassment – yet again. I’ve already written to my local representatives and let them know I will be keeping this in mind during the next election. Not that it will do any good. I’m convinced that we have the stupidest voters in the country. If not, then a really close second behind California.
Apparently insufficient attention has been paid to wave mechanics. Certain wave patterns could break them “like match sticks”. Professor John Grue from the Department of Mathematics at the University of Oslo, Norway is one of the world’s foremost experts on wave research.
http://www.sciencedaily.com/releases/2013/02/130226081005.htm
Sadly, offshore wind energy promoters and advocates have not learned that when you piss into the wind, you wet yourself. Sailors have know of this axiom for several millennia.
RHS says:
March 13, 2013 at 8:28 am
That would involve digging a very, very deep hole. Come to think of it, it sounds exactly like the kind of jobs program Teddy would have been so fond of.
Maybe Minnesotans for Global Warming could do a parody of the famous Woody Guthrie song:
This wind is your wind; this wind is my wind.
From the mountain passes, to New Jersey beaches …