Wind Power Tax Credit Debate Goes Political

With the current federal wind energy production tax credit of 2.2 cents per kilowatt hour expiring December 21, 2012, layoffs in the wind energy and related industries, and rapidly falling natural gas prices are driving the debate over extension of the tax credit into the public arena. Spain based Gamesa Technology Corporation will lay off 20% of its U.S. workforce in September because of uncertainty over the fate of the expiring tax credit, according to spokesman David Rosenberg. Though Florida based NextEra energy will finish out currently ongoing developments to add 1,300 megawatts of capacity, there are no new projects slated for 2013, according to spokesman Steve Stengel. Wind turbine parts maker Mitsubishi Power Systems is mothballing a brand new $100 million parts factory in Arkansas as the tax credit expires, and taking a $250 million loss on write down of its turbine inventory.

In Texas, the nation’s largest generator of wind power, development is grinding to a halt. “Without the tax credit, I don’t think Texas will see any wind farm development,” according to Pecos County Economic Development Director Doug May. Texas wind power industries are facing the twin challenges of plummeting natural gas prices and maxed out power transmission grid capacity for moving wind power from the arid plains to population centers.

Since 1992, Congress has renewed the wind power tax credit seven times, and allowed it to expire three times. Each expiration was followed by a 73% to 93% drop in turbine installations. This year will be no exception, according to Alex Klein, research director for HIS Emerging Energy Research. Expiration of the federal production tax credit, he says, “shifts the costs of the renewable portfolio from the federal taxpayer to the electricity consumers in that state. The market will be pretty challenged without the PTC.”

Speaking in favor of renewal of the production tax credit at the opening of Spain based IngeTeam’s wind energy component factory in Menomonee Valley, Wisconsin Thursday, U. S. Energy Secretary Steven Chu urged prompt Congressional passage of a bill extending the tax credit. From the other side of the political aisle, Texas Republican Congressman Michael Conway is urging a phase out of the wind energy incentives, and a return to purely economic forces within the electric power market. “Scaling back the production tax credit will affect jobs. I get how hard that is,” Conway says, “But for the greater good of this country, we can’t continue to do things the way that we have.”

Without regard to the policy considerations surrounding development of renewable energy resources of all descriptions in our nation, it seems election year politics are going to decide which way the wind blows.

Minnesota Court Strikes Local Wind Farm Setback Rules

The Minnesota Court of Appeals struck down a Goodhue County wind farm setback rule earlier this week in favor of less stringent state established setback requirements. Goodhue County commissioners passed a regulation imposing a 2,700 foot setback rule on the project proposed for 5o turbines each 400 feet high, ostensibly to eliminate shadow flicker and turbine noise from neighboring properties. The state permit for the project imposed only 1,500 foot setback.

The Minnesota Public Utilities Commission issued the 1,500 foot setback permit after a three day hearing which found that the county’s larger setback would have made the wind farm impossible to build. County Commissioners has imposed the 2,700 foot setback to completely eliminate noise and flicker from neighboring properties so as to avoid the cost of modeling and measuring any health effects from noise and flicker. The Court of Appeals determined that there was no evidence of any health effects from flicker and noise, and that the county’s rule was unjustified.

AWA Goodhue Wind, developer of the project, still needs to satisfy environmental requirements respecting bald eagles and other local wildlife before construction can commence. Coalition for Sensible Siting, the environmental group opposing the wind farm in the court case, has not yet decided whether to appeal the ruling to the Minnesota Supreme Court.

State Fiscal Problems Threaten Illinois Wind Power Development

Cash strapped Illinois government has borrowed nearly all of the state’s alternative energy supply investment fund, crippling future development of wind power in the state. Established in 2010, the fund was opened in September 2010 with initial cash of $7.1 million, and within a month $6.7 million was borrowed by various state agencies to pay past due bills. Although the Illinois Power Agency says the debt is being repaid, and it plans to use the repaid cash for its intended purpose, renewable power developers are doubtful the fund’s balance will become available to them with any certainty in the future.

By current law, there is a 2025 deadline for Illinois to get 25% of its electric power from renewable sources. However, changing conditions in the state’s electric market are driving wind power developers away from the state. Houston based EDP Renewables has closed its Bloomington office and, although that company has invested $1.5 billion  Illinois wind farms, future wind power developments are now on hold. “We need to be able to lock in long term contracts in order to sell our power,” says EDP Senior Manager of Government and Regulatory Affairs Jeff Bishop. “Currently, the way the renewable portfolio standard is structured, it makes it very difficult for us to procure long term contracts.”

When Commonwealth Edison signed its first long term wind power contracts in 2010, Com Ed had 99 percent of residential customers in the Chicago region, but that market share is rapidly diminishing under recent legislation permitting municipal aggregation. Already 100 cities, villages and towns have moved their residents to other power companies, and another 160 have passed measures which will further erode the Com Ed market share. Com Ed predicts that by 2017 it will have only 65% or so of the Chicago region market for residential power.

The Illinois Power Agency, which procures energy on behalf of Illinois utility companies, says this sort of market volatility makes it impossible to grant long term contracts at stable prices for new wind power development. Chicago based Invenergy’s Director of Origination Craig Gordon believes that the municipal aggregation legislation jeopardized even those long term renewable power contracts already in place. “We’ve seen a lot of these municipalities are switching their suppliers … and what that does for folks who have long term contracts, is put those contracts in jeopardy,” Gordon says.

Once again, political meddling with long term power market forces in attempts to fix short term problems has created a nightmare for the long term plans of alternative energy developers, and the uncertainty is driving them out of our state.

Congressional Inaction Kills Pennsylvania Wind Power Project

Spanish wind power developer Gamesa, Inc., citing uncertain federal wind power subsidies, has announced cancellation of a proposed 22,000 acre, 60 megawatt 30 turbine wind farm on Shaffer Mountain near Central City, Pennsylvania. Gamesa had been pushing forward with development of the proposed wind farm, even in the face of environmental opposition from a threatened lawsuit challenging U. S. Fish and Wildlife Service approval of the project, based on the alleged impact of the turbines on populations of an endangered species of Indiana bats which migrate through the area.

Congressional inaction on reauthorization of tax credits for wind power development is costing jobs in both the manufacturing and construction sectors of our economy, and the job losses in the renewable power sector will continue until Congress acts. The failure of our political leaders to even take up legislative measures on this important issue reflects poorly on both political parties.

Offshore Wind Farms May Soon Dot Great Lakes Waters

Touting wind energy as having the “potential to create American jobs and reduce pollution in our communities,” White House Council on Environmental Quality Chair Nancy Sutley announced that the Obama administration and five of the Great Lakes states have agreed to accelerate the regulatory review process for offshore wind farms in the waters of the Great Lakes. “The goal is to cut through red tape so we can efficiently and responsibly evaluate offshore wind projects,” she said.

As of today, there are no offshore wind turbines in any of the Great Lakes. Opponents cite threats to scenic vistas, birds, fish, and shoreline property values, while supporters point out the potential generation of 700 gigawatts, or one fifth of the entire national potential for wind power from the long, uninterrupted stretches of Great Lakes offshore wind potential. So far, no one has mentioned the possible impacts on lake navigation as either a positive or negative influence on decision making.

Renewable Energy Construction – Will Bureaucrat’s Romance Sidetrack Federal Policy Initiatives?

Steve Black, Counselor to the Secretary at the U. S. Department of The Interior, and chief architect of the Obama administration’s alternative energy policy initiatives, has been ordered by the department’s ethics office to recuse himself from all matters involving California wind and solar energy company NextEra, because of his romantic relationship with NextEra’s lobbyist Manal Yamout. Yamout, NextEra’s Director for Governmental and Regulatory Affairs, formerly served as special advisor for alternative energy to California governors Arnold Schwartzenegger and Jerry Brown. Black leads the federal Renewable Energy Policy Group, a network of senior federal and state energy officials who make key decisions on multimillion dollar solar and wind energy projects.

It was Black himself who brought the romance to the attention of Interior Department ethics officers last fall. Black, age 51, was counsel for Interior Secretary Ken Salazar when Salazar was a Sentaor from Colorado.  Salazar brought Black over to Interior, and put him in charge of the Obama administration’s overall renewable energy planning effort, which President Obama is describing as his “all of the above” energy strategy on his two day campaign swing through Nevada, New Mexico and Oklahoma this week. The identical “all of the above” title has also been stamped onto Obama administration energy policy efforts by both Obama’s Press Secretary Jay Carney and Obama’s Chicago based campaign press official Ben LaBolt.

Conservationists working with the Interior Department on alternative energy policy initiatives have questioned Black’s ability to continue his policy leadership in light of the prohibition on involving himself in any matter affecting NextEra. Ileene Anderson, of the Center for Biological Diversity and a member of Black’s planning groups, says: “We’re looking at these large scale planning processes. It’s going to amend land management plans in perpetuity, essentially. The Interior Department needs to have someone engaged that doesn’t have ties to any company, so that they can make the best decisions to get renewable energy off the ground.”

The same sentiments were echoed by Kern County, California, planning director Lorelei Oviatt, who also works with Black in her official capacity. “I absolutely see the concern,” Oviatt says. “I think the integrity of the process is very important. Landowners and public land users sometimes think the process is not fair and equitable. Anything that raises questions about the integrity of the process is not good.”

While NextEra asserts that Yamout, its Washington D.C. lobbyist since July 2011, has not engaged in any lobbying on its behalf with the Interior Department or the State of California since she was hired, it seems a lot of folks believe that pillow talk might be one of the most effective forms of lobbying.

Ireland and China Back Obama’s Clean Energy Policy in Illinois

President Obama’s bold new goal that “by 2035, 80% of America’s electricity will come from clean energy sources” will be getting hard dollar backing from China’s Xinjiang Goldwind Science and Technology Company Ltd. and Ireland’s Dublin based Mainstream Renewable Power, Ltd. which plan to begin construction this coming July of the Shady Oaks wind farm in Lee County’s Brooklyn Township near Compton, Illinois. Last month the Illinois Power Agency awarded Goldwind the successful bid on the 106.5 megawatt Shady Oaks project, which will consist of 71 Goldwind 1.5 megawatt permanent magnet direct drive wind turbines, and is planned to produce enough power for 30,000 homes in the community.

Goldwind and Mainstream expect to spend about $200 million building the wind farm, which is projected to produce 120 construction jobs and 10 or 12 permanent jobs once the project goes into commercial operation. The Shady Oaks wind farm will sell electricity to Commonwealth Edison under a 20 year power purchase agreement. Commercial operation of the facility is planned for the second quarter of 2012.

Major U. S. manufacturing participation in the project comes through Goldwind’s purchase of $26 million in bearings for the wind turbines from Canton, Ohio based Timken Company.

Goldwind USA CEO Tim Rosenzweig remarked: “We are elated to have been selected to build this project and to bring critical jobs and opportunity to the local wind industry in Illinois.” Mainstream CEO Eddie O’Connor chimed in with the comment: “Our success today comes down to the strength of our relationship with Goldwind and our joint mission to provide low-cost, reliable renewable energy to the U. S.”

Low Carbon Energy Technologies In Peril

New Chinese restrictions on export of rare earth metals threatens the development of low carbon energy technologies to commercial scale in the United States, according to Senator Edward Markey of Massachusetts, who is asking for the Obama administration to take action against the proposed 30% reduction in Chinese rare earth export limits. China is the largest supplier of the exotic metal elements used in solar cell power generation technology, as well as in computer chips for commercial and defense applications.

FTC Issues New Green Marketing Rules

Cracking down on misleading claims of environmental friendliness in marketing materials for numerous products and technologies, the Federal Trade Commission has issued new rules respecting the use of terms like “degradable” and “carbon offset” in advertising materials and on product packaging. Proponents of claims that products are “environmentally friendly” will be expected to produce competent and reliable scientific studies backing up their claims. Use of misleading certifications and seals of approval could subject advertisers to penalties. The guidelines discourage use of ambiguous phrases like “renewable materials” or “renewable energy” in favor of specific information about the materials and energy sources used in product manufacturing.

Pricing Cuts Promote Commercial Scale Solar Power Development

According to panelists at the 12th Annual Electric Power Conference and Exhibition in Baltimore this week, decreasing material and construction costs of commercial scale photovoltaic power plants [PV] and thermoelectric solar power production facilities [CSP/CST] are promoting commercial scale solar power production developments in climates where sunlight is available most of the year to “fuel” such facilities. Leo Casey, Vice President and Chief Technical Officer of Satcom Technology Corp. in Boston told attendees that utility scale installation cost for PV facilities has dropped from $5 per watt to $4 per watt already, and he expects future pricing cuts down to the level of $1 per watt for solar panels and $1.50 per watt for construction cost, or a total of as little as $2.50 per watt of installed capacity. According to William Bettenberg of Applied Materials, Inc., more and more utility companies are embracing PV technology, with 485 megawatts of PV generating capacity installed last year.

Bob McDonald of Skyline Solar, Inc., echoed the same theme regarding CSP/CST solar power production facilities. McDonald cited both reduced module cost and improved installation expense as contributing to an improved position for commercial scale solar thermal power generation, particularly since the stored heat involved in the CSP/T process makes such production facilities especially useful as load following power generation facilities, rapidly becoming less expensive to build than other types of “peaker” generating units.

EPA Sees 180 New Nuclear Power Plants Over The Horizon

USEPA’s analysis of pending climate change legislation predicts construction of 180 new nuclear power reactors by 2050, more than doubling the currently operating 104 reactors in 31 states, which provide 20% of the nation’s electric power. Presently the Nuclear Regulatory Commission has only 30 applications pending for new reactor construction. At an estimated investment of $10 billion each, the projected increase represents total projected cost of nearly two trillion dollars.

It will be interesting to see whether environmental groups come out in greater force against nuclear waste storage or carbon sequestration as the debate over details of greenhouse gas reduction legislation proceeds in Congress. Either way, nasty stuff is getting buried underground in someone’s back yard.

New Mexico Clean Power Hub Adopting Superconductor Pipelines

New Mexico governor Bill Richardson is announcing today that the Tres Amigas SuperStation hub, the first connection among all three United States major power grids, will use superconduction technology to transfer and balance the transfer of gigawatts of electric power from one region of the nation to the other two. The United States electric power transmission infrastructure is divided into three main grids, or interconnections: the Eastern, Western and Texas Interconnections. There are a few locations where two of the three can share power across their geographical boundaries, but there is nowhere yet that a sharing arrangement among all three exists.

That is about to change. Tres Amigas SuperStation, to be built on 22.5 square miles of land near Clovis, New Mexico, is one place having easy access to power from all three interconnections. The project is designed to use a triangular arrangement of underground direct current superconducting electric power "pipelines" to enable all three regional grids to share and balance power transmission. Such an interchange is required to make it possible for clean hydroelectric, wind, and solar power generated in less populated areas of our country to be efficiently sold in more populated locations. The successful implementation of any of the cap and trade proposals now pending in Congress will require the existence of the Tres Amigas Superstation, or something like it.

Tres Amigas has already received the right to lease the 22.5 square miles from the New Mexico State Land Office, and is in the process of filing for FERC permission to operate as a merchant transfer entity, allowing Tres Amigas to charge a fee for power transfers across its hub.

Secretary Chu Announces Clean Coal Grants, Faces Congressional Grilling

Last week energy Secretary Steven Chu announced the release of $2.4 billion in grant funds for development of clean coal technology, remarking to a meeting of the Clean Coal Council that the U. S. has the world's largest deposits of coal. Of the money released, $800 million is for efforts to reduce sulfur, nitrogen and mercury pollution, $1.5 billion for carbon capture projects, and $50 million for identification of geologically suitable CO2 injection sites.

Yesterday, Chu faced a grilling from Senators regarding their pet energy projects, including questions from Byron Dorgan of North Dakota about flat funding of clean coal research, and reduced funding for fuel cell technology; from Robert Bennett of Utah about nuclear power reactor development; from Lamar Alexander of Tennessee about failure to include nuclear power in the definition of "renewable energy," from Thad Cochran of Mississippi about strategic petroleum reserve storage in Mississippi subterranean salt domes, from Diane Feinstein of California about wind farms in the California desert, and from Washington's Patty Murray about cleaning up Defense Department nuclear weapons sites. I am guessing we can look for Senate earmarks to may of these projects.

Climate Change Legislation Shuffles Forward

House Energy and Commerce Chairman Henry Waxman now predicts he will have the votes to sent to send a climate change bill to the House floor next week, following a closed door meeting of Democrats on the committee. Expect a draft of the bill Thursday and a markup beginning Monday. Apparently the bill will set a greenhouse gas emission reduction goal of 17% by 2020 and 83% by 2050. Cap and trade credits will be distributed 35% to electric utilities, 15% to heavy industry, with details still to be worked out regarding credits to refineries.

The bill will likely require 20% electric power production through a combination of energy efficiency measures and renewable power production by 2020, with 5% of that coming from efficiency measures, unless a state's governor certifies 15% renewable production is not possible in his or her state, in which case an additional 3% efficiency offset will be allowed. Further increase to 25% renewable/efficient energy by 2025 is also to be required. "Renewable" sources will most likely include energy from waste and biomass, but not nuclear energy. The compromise is to exclude existing nuclear facility power from the baseline for measuring the reductions.

On the Senate side, Energy and Natural Resources Chairman Jeff Bingaman is marking up plans for a new power transmission grid, facing 28 proposed amendments to his draft proposal, which will then become part of the cap and trade Senate bill originating in Barbara Boxer's Environment and Public Works Committee.

At a Chamber of Commerce energy forum today House Majority Leader Steny Hoyer and Interior Secretary Ken Salazar said the Obama administration is committed to a comprehensive energy program including coal, oil and nuclear power as well as renewable energy. Hoyer reminded the audience of business people that nuclear power and coal produce 85% of electrical power in this country. Senate Republican Conference Chairman Lamar Alexander of Tennessee reminded the same audience that wind and solar power are inefficient, expensive, occupy a large amount of space, and cannot be counted on to provide sufficient power during peak demand.

All of this legislative committee activity has certainly brought out the industry and environmental lobbyists on all sides of these issues. Statistical analysis shows Democrats on Waxman's 58 member committee who oppose the bill have receives on the average six times as much campaign money from industries emitting greenhouse gasses as those committee Democrats supporting the legislation. In the first quarter of 2009 industry interests have spent a total of nearly $80 million lobbying against cap and trade, with environmental groups spending $4.7 million pressing for passage, and the renewable energy industry adding another $7.5 million in support of the measure.

Bingaman Dings Energy Department, Pushes Renewable Power Generation

Senate Energy and Natural Resources Chairman Jeff Bingaman is threatening to introduce legislation establishing a Clean Energy Deployment Administration to oversee loan s and guarantees for development of new energy technologies, because the Department of Energy has not yet approved a single loan application under the program established in 2005. Four years and nary a dollar spent. Whoa!

Meanwhile, construction of power generation facilities using alternative sources of energy is being held up while Bingaman's committee debates the question whether it should mandate 255 renewable energy production by 2025, as Bingaman and the Democrats insist, or only 155, as Republicans propose. House Energy and Commerce Chairman Henry Waxman is putting forth an alternative proposition of 17.5% renewable energy, with 10% improvement in the efficiency of power production overall. Until this Congressional debate is resolved, power production facility designers will remain unable to envision the power plant of the future, and power facility construction will remain at a standstill.

Environmentalists Push 25% Renewable Power Mandate

The Union of Concerned Scientists is distributing a new analysis to key members of Congress arguing that a legislative mandate for producing 25% of American electric power from renewable sources like solar, wind and biofuels would create 300,000 new jobs and save consumers $64.3 billion in lower electric and natural gas bills, over the next ten years.