Library filed under Energy Policy from Maryland
The governor's premise in the referenced article is absurd. How can the governor cap the cost to ratepayers at $2 per month? The answer is he can't. Actual costs associated with wind generation will be way higher for a number of reasons.
For any economically viable offshore wind proposal, "there's a massive subsidy from the ratepayers involved," said David Wisowaty, CEO of Fenimore Partners, a New York-based consulting firm that specializes in wind energy. "It's always the same issue - the very high cost of offshore power. It just requires some way of getting a high price per kilowatt hour" from consumers.
In a sweetener for the power industry, the administration has scrapped the old bill's requirement that utilities sign long-term contracts under which they would have had to purchase off-shore wind energy. ...But the new proposal would still provide a market for the wind farm's energy by requiring suppliers to get a set amount of their power from wind.
Maryland Gov. Martin O'Malley says he is ready to promote offshore wind energy in this year's General Assembly but suggests his proposal will be less aggressive than one that failed in the 2011 legislature. Mr. O'Malley, a Democrat, hinted last week that he will push for legislation that encourages utilities to buy energy credits from offshore wind firms.
It said the Coast Guard had recommended removing a swath of potential Outer Continental Shelf leasing blocks because they were in a path generally taken by ships entering Delaware Bay from the south. The Coast Guard may request an even wider shipping safety corridor after further study, the report added, noting that the ports of Wilmington and Philadelphia are among the busiest in the nation.
What O'Malley fails to consider is that the poor economics of this project - potentially huge construction and maintenance costs and higher electric prices for decades to come - won't change by next session. Nor will the risk factors of placing giant windmills far out into the stormy Atlantic.
Senate committee on Thursday killed a bill backed by Democratic Gov. Martin O'Malley to implement offshore wind energy in the state. The Senate Finance Committee announced it will conduct a study this summer on the Offshore Wind Energy Act, ending hope of its passage during the 2011 General Assembly session that ends Monday.
Concerns about consumer costs have been the main hang-up with the plan to develop a wind farm off the coast of Ocean City. Construction and maintenance is projected at well over $1 billion. Energy companies would pass that cost on to consumers.
Mr. OMalley's proposal, which would require utility companies in Maryland to enter into a minimum 20-year wind-energy contract, failed to garner support from either Democrats or Republicans largely because it would increase consumer energy costs.
Offshore wind is too risky. It's too expensive even as advertised and will probably cost more than that. Although they won't make for flashy talking points if O'Malley runs for president, there are far better and cheaper ways to meet Maryland's energy and environmental goals.
What may explain the need for government intervention is that the O'Malley administration appears to doubt the market potential for wind power. In 2007, the Maryland Public Service Commission paid a consultant more than $2 million to report on future energy options. The report concluded that offshore wind was the most expensive form of energy among all commercially viable choices.
"I don't want to see this bill go away, I just think it needs a lot of study, whether they can get it done during this session, I don't know," Middleton said. "Put it this way: I would like to see at minimum a study."
Gov. Martin O'Malley's signature piece of energy legislation may be put on hold this year, tripped up by lawmakers' reservations about the cost of guaranteeing a market in Maryland for offshore wind energy.
"A large number of us on the committee were very concerned that the governor was willing to place this burden on the back of the Maryland ratepayers," Kittleman told WMAL. "Why don't we wait for five years to see if the prices will come down, and then we can enter into a long-term contract if necessary."
According to the governor's office, the cost of the subsidy would be spread among all Maryland electric customers in the form of monthly surcharges. The fee has been estimated at $1.44 a month for residential customers, but an analysis pegged the initial fee at $3.61 a month. For the state's largest industrial power users, the surcharges would add up to tens of thousands of dollars a month.
O'Malley's offshore wind legislation, which his administration has not yet introduced, will direct state regulators to require Maryland's utilities to award long-term contracts to procure certain amounts of wind energy. State energy officials have projected that the first wind turbines could operate off Maryland's coast as soon as 2015.
"It is trying to propel companies into renewable stuff. The cost will be passed on to the consumer," Brinkley said. Delegate-elect Patrick Hogan, also a Republican from Frederick, said the bill may go too far. "We should encourage alternative energy, but mandating contracts with the state or between private companies might be overstepping bounds," Hogan said.
A bill requiring utilities to enter into long-term purchasing agreements for wind-generated power is in the works for the 2011 General Assembly, with supporters and opponents getting ready to air the issue. Prince George's County Sen. Paul G. Pinsky and Montgomery County Del. Thomas Hucker are planning to refile legislation similar to what they sponsored this year.
State senator Paul Pinksy (D-Prince George's) and delegate Tom Hucker (D-Montgomery) have filed a bill mandating state utilities enter into long term contracts to purchase wind generated power. ...If the Pinsky-Hucker bill becomes law, Google and it's investment partners will be the only winners and Maryland utility customers will be the losers.
While Maryland's energy future might lie in harnessing the breezes off Ocean City, the frontier for now is in the same place it's always been - in the mountains of Western Maryland - where the region's winds and coal and natural gas reserves are drawing prospectors. That's unsettling to some environmentalists and Western Marylanders.