Last month, New Hampshire's Gov. John Lynch announced that 25-percent of the electricity powering the state's government buildings will now come from wind power.
Following a competitive bidding process the state signed a $4.4 million load-service contract with ConEdison Solutions , to supply electricity from both renewable and traditional fuel suppliers in the period from July 1, 2009 to May 31, 2010.
Lynch touted the agreement as "...another step in our efforts to protect our economy and our natural resources by ensuring 25 percent of the electricity used by state government comes from clean, renewable wind power."
The specifics of the contract are straightforward. The state locked-in its purchase of 47,352,000 kilowatt hours (kwh) at a fixed price of 9.2 cents per kwh. The price was all-inclusive and did not distinguish between electricity acquired from wind versus that from other fuel sources. Any added charges associated with transmission or distribution of the energy were excluded from the price and will be billed separately by the local utility.
The state's Energy Manager, Karen Rantamaki, told Windaction.org that New Hampshire had been purchasing its electricity from Unitil Corporation. When asked what the State would have paid in electricity costs had it stayed with Unitil she directed us to Unitil's website.
What we found surprised us.
Unitil's large customer prices are well below 9.2 cents per kwh. And with natural gas prices at a seven-year low and expected to remain depressed for the next 6-18 months, we anticipate electricity prices to remain stable[1]. New Hampshire's decision to sign with ConEdison appears less about saving taxpayer money and more about buying wind.
So what exactly did New Hampshire purchase for the higher electricity prices? Not much.
According to ConEdison Solutions, the "wind power" it sells is derived from its partnership with Community Energy, Inc., (owned by Spanish energy giant Iberdrola S.A.) who buys and sells renewable energy credits (RECs) from around the country.
We asked ConEdison Solutions the following four simple questions that NH's Ms. Rantamaki could not answer for us.
Question 1: Where are the wind facilities located that will be supplying the electricity?
Answer: The bulk of the RECs ConEdison sold in the last year came from Texas.
Question 2: When will the electricity be generated?
Answer: All renewable energy credits ConEdison sells are certified by GREEN-E. According to GREEN-E, certified RECs "include only renewables that are generated in the calendar year in which the REC is sold, the first three months of the following calendar year, or the last six months of the prior calendar year". For New Hampshire, the wind energy must be produced in the period from July 1, 2008 to March 31, 2010.
Question 3: What is the price of each REC?
Answer: National Green-e Certified Wind RECs are trading between 0.0012 cents and 0.0015 cents per kilowatt hour. At 0.0015 cents per kwh, the RECs acquired by New Hampshire would have a total market value of just under $18,000.
Question 4: Since the wind projects are already operational, are there any assurances that the money paid for the RECs will go toward expanding wind power facilities?
Answer: No. There are no stipulations on how revenue earned through the sale of RECs is to be spent.
Given these facts, we wonder if Governor Lynch is even aware of the misrepresentations in his claim above.
For example:
1. Electricity produced by turbines in Texas stays in Texas. The ConEdison agreement will have no effect on the state's consumption of fossil fuel.
2. GREEN-E certified RECS sold to New Hampshire could well have been "created" entirely in the year leading up the contract being signed, demonstrating the irrelevancy of the ConEdison agreement relating to wind.
3. There is no way to show how paying higher electricity prices will protect the state's economy or its natural resources. In fact, the higher price per kwh locked-in with ConEdison will result in costs far exceeding the market value of the contracted RECs.
At a time when the state is struggling to meet its budget, the pricey ConEdison contract does nothing more than raise electricity prices, line the corporate pockets of REC brokers ConEdison Solutions and Community Energy, and provide Lynch the PR opportunity to flaunt his "greenness" before an un-informed public -- Greenwashing at its best!
[1] According to the ISO-New England's August 7, 2009 presentation (Slide 54), wholesale electricity prices in the region are closely tied to natural gas prices.
One compelling argument favoring wind energy development in rural areas is the opportunity for local economic benefits, especially jobs. Wind energy proponents fervently tout numbers showing hundreds of high-paying jobs created. But as with many of the benefits attributed to wind energy development, the details tell a different story.
Most of the jobs in a wind energy project are created during the construction phrase. These jobs are temporary lasting between 6 and 18 months. High-paying jobs, in particularly are usually filled by people who come to the area for short periods of time to assemble the towers, turbines, and associated electronics and to build substations and transmission lines necessary to connect wind turbines to the electric grid. Few permanent jobs are created.
Many wind companies publish their estimated employment numbers when trying to secure public support, however, they have no obligation to report actual employment so it can be difficult to confirm or refute their preconstruction estimates.
Larger project owners have the resources to pool their operational functions (purchasing parts, administrative, payroll, insurance, etc.) and can have centrally located crews to do maintenance on multiple projects. Smaller project owners sign maintenance contracts with turbine vendors that do not rely on local labor. For example, Vestas has its own turbine operations business.
Windaction.org received this report written by a gentleman laboring at a wind energy construction site in the United States:
"I went to the jobsite to check in yesterday afternoon. I noticed a lot of folks there who didn't speak English. I put on my mandatory hardhat, safety vest, hard-toed boots, and safety glasses, poured myself a cup of coffee and walked to the warm-up area. There we were given our daily safety talk.
This phase of construction is winding down and now they're 'energizing' the 90 or so turbines erected.
"After the safety talk and the pep talk, we formed a big circle. They put on loud music and a large fellow led us in stretches! Mind you the sun had still not risen and there were more than a hundred people there, about 15 men for every woman, all with hardhats, safety vests, steel-toed boots, and safety glasses on, all doing coordinated stretching.
"I asked someone in my office how many were from here. He said he was a local and that there were a few more. He said most of the early construction jobs, including site preparation labor positions were done by the locals. The actual design work plus the construction, erection of the towers, the energizing, and the operation, were all done by people who have been doing this type of work all over the world - they're trained and experienced, which means they're not from here. And the crews are from Spain, Poland, Germany, and Korea....
"So as usual, the low paying jobs go to us. The investment comes from out-of-state and largely from out-of-country. The profits go out-of-state and largely out-of-country. The workers come from out-of-state, and many from out-of-country.
"By the time the average person realizes what's happening, there will be huge wind farm facilities built across the state. They will all be financed, built, owned, and operated by out-of-state entities, and most of the energy will be sent out-of-state and the profits will largely go out-of-state and overseas. And we will be sitting here wondering what happened.
"Oh well, at least I have a job. I wonder if I'll be paid in Euros."
Citing credit woes, Noble Environmental Power LLC of Essex Connecticut announced last week that all work was suspended at its 14-turbine wind farm under construction in Bellmont, New York. The turbine foundations have already been laid at the site and Noble indicated work would not resume until summer 2009. Contractors for Noble have informed Windaction.org that, while the announcement was sudden, there were indications the firm was experiencing cash flow problems months ago.
Earlier this year, Noble filed plans to raise $375 million in an initial public offering (IPO). The share sale was to be underwritten by now bankrupt Lehman Brothers. Public reports of the IPO stated the company showed no revenue on its income statement and was nearly $1 billion in debt. The company has 282 megawatts in operating wind power projects in the U.S.
Noble Environmental, along with First Wind (formerly UPC Wind), is under investigation by New York Attorney General Andrew Cuomo for alleged improper dealings with public officials and anti-competitive practices. It is reported the company's credit woes partially stem from reluctance of financiers to invest in a company under investigation.
Noble's problems are not just legal and financial, they're also technical. The company is experiencing problems with its Clinton and Ellenburg wind parks erected in Clinton County NY and online earlier this year. None of the 121 turbines have been operational for the last two weeks. The root cause of the shutdown has not been announced.
In these troubling economic times, Windaction.org strongly encourages communities and landowners involved with wind farm development to look out for themselves by ensuring decommissioning plans are filed prior to commencement of any construction. Such plans should be backed with bonds sufficient to cover the costs of restoring a site to its original condition and the full removal of scrap materials. Note, given dramatic fluctuations in scrap value and hauling costs, decommissioning plans should never allow the value of the scrap to be deducted from the projected turbine dismantling costs.
Robert Bradley, in his seminal policy paper entitled Renewable Energy Not Cheap, Not "Green", discusses the Department of Energy's 1976 study which estimated wind power could supply nearly 20% of the U.S. electricity by 1995. By 1996, wind represented 1/10th of 1 percent share with clear signs the market was in decline. In 1997 Enron entered the picture with its purchase of Zond, one of the largest developers of wind generation. This, coupled with new state and federal restructuring initiatives that funneled billions into new subsidies for wind and other renewables, resuscitated the near-dead market.
Yet, the inherent flaws of wind energy that made it economically unviable in the 1990's still exist today. Bradley wrote "because wind power's high up-front capital costs and erratic opportunity to convert wind to electricity more than cancel out the fact that there is no energy cost for naturally blowing wind. Low capacity factors, and still lower dependable on-peak capacity factors, are a source of wind power's cost problem." Much of Bradley's paper applies today and it's well worth reading.
Two different, but very similar news reports (CBS News: Winds of change blow in Texas and NPR: Winds of change blow into Roscoe, Texas) were published in the last two weeks. Each highlighted the economic opportunities resulting from wind energy development in West Texas and the revitalization of otherwise land-rich, resource-poor communities of the State. CBS termed it a "wind energy gold rush".
These stories stand in stark contrast to the message offered in this short video from the same area. Further, not all landowners who lease land for wind development continue to support their decision after the turbines are operational. This paid ad, which appeared in a Wisconsin paper in October 2007, tells a disheartening story of a landowner who recognized the fallout of his decision after the damage was done.
The wind industry has incented rural communities to host wind energy installations with promises of jobs for local workers, the bulk of which are short-term, construction-related positions. After the facility is operational, only 1-2 people are employed full-time near the site per 50 megawatts of installed capacity. The facility largely runs unattended and is monitored remotely from locations in Europe and elsewhere.
Contrast this with a typical biomass facility that provides 20 full-time positions at the operating plant and another 2 positions per megawatt capacity (40+ people) in the woods conducting fuel procurement (ref. Ridgewood Renewable Power of New Jersey). But even temporary local construction jobs for wind plants may be proving elusive, as this letter from the Ironworkers Local 33 in New York demonstrates. See: http://www.windaction.org/documents/11901.
In the rush to legislate renewable energy mandates, state legislators failed to consider needed infrastructure. Onshore wind plants are typically built hundreds of miles from load centers in areas with little or no transmission. Now states are scrambling to socialize the cost of transmission, a cost normally borne by the generators. Burdening ratepayers with this is contrary to the rules and recommendations held by utility commissioners as recently as a few years ago. Comments to FERC by the New England Conference of Public Utilities Commissioners and the Vermont Department of Public Service ( http://www.windaction.org/documents/11629 ) make the point this way:
"If a generator is not required to pay for transmission upgrades and the cost is instead to be socialized across all load, then generators will choose their location based on other factors, such as where land is cheaper or emissions permitting is easier, rather than where good transmission planning or market economics would dictate. On the other hand, if the cost of transmission associated with locating in these other areas were borne by the generators themselves, these economic tradeoffs would be internalized and economic location would be more likely to occur. As currently proposed, the costs are not borne by generators, which could lead to uneconomic grid expansion."
Further skewing the economics, in the case of wind, 70% of the costly transmission line's capacity will be un-utilized.
In a July 9, 2007 Wall Street Journal article ( http://www.windaction.org/news/10617 ), wind power was described as "basically a cottage industry, until recently", and the race to build wind facilities worldwide has created a turbine shortage. Manufacturing of the turbines, and their 8000 specialty parts, is being squeezed, raising prices and the potential for quality problems.
Current reports from Germany ( http://www.windaction.org/news/11519 ) detail quality problems with installed turbines, "...wind power providers and experts are now concerned. The facilities may not be as reliable and durable as producers claim... Fractures form along the rotors, or even in the foundation after only limited operation". Last week, a Siemens wind turbine at PPM's Kondike III site in Oregon collapsed killing one person and seriously injuring a second ( http://www.windaction.org/news/11547 ).
Energy policymakers in Massachusetts, Delaware, and elsewhere see a future where 1000’s of giant wind turbines, blades reaching to 300-feet in length, will populate the deep waters off the U.S. coast from Maine to Cape Hatteras (NC) and beyond. They envision wind energy as the primary source of electricity for eastern population centers. The fickle nature of wind will be 'corrected' by building new onshore gas plants that generate during low wind conditions.
Little has been voiced publicly about this eco-dream. Is it even possible using existing infrastructure? or will a new super-grid need to be created? How much of the enormous cost will be borne by the public? While money is being expended today, have there been policy and technical discussions reviewing the feasibility? There is very limited experience worldwide for deep-water wind development and none in the U.S. It's worth noting that the near-shore Cape Wind (MA) and LIPA (NY) projects, both heavily reliant on public subsidies and existing infrastructure, will each cost nearly a billion dollars to build. The one Texas offshore proposal, with subsidies, has been deemed economically unviable and scrapped by the developer.
