Last week we passed a landmark when Heidi Fleiss, the Hollywood madam, announced she was giving up plans to open The Stud Farm, Nevada’s first male brothel. Instead, she is putting her money into alternate energy.

“It’s where the money is,” she told the Las Vegas Review-Journal. “It’s the wave of the future.”

Jesse Ausubel, director of the Center for the Human Environment at Rockefeller University, takes the opposite view. “Alternate energy is the next subprime mortgage meltdown,” he says. When Heidi Fleiss has jumped in, we may be reaching the top of the market.

In the coming months and years, President Barack Obama’s $787-billion stimulus package will be steering us down the path California took in the 1980s and 1990s, leading up to the great California Electrical Shortage of 2000. The stimulus package contains:

• $8 billion in loan guarantees for wind and solar projects.

• $4.5 billion for “smart grid” upgrades.

• $6.5 billion to help the Bonneville and Western Area Power Administrations upgrade their grid to ferry renewable energy from remote regions.

• $600 million to help the Department of Defense convert facilities to wind and solar.

• $200 million for biofuel refineries, and on and on.

There is not one penny in the bill for the one form of energy that might give this country a future — nuclear power.

All this follows the plan laid out by Amory Lovins, Al Gore, Thomas Friedman and all the other enthusiasts who promise us that alternative energy is the future of the country.

“Wind is the fastest growing form of energy generation in the country,” Al Gore told the Senate energy committee two weeks ago, while promising the Senators that “All we need is an area 100 miles on a side and we could provide all the electricity we need to run the country with solar collectors.” (Gore then quoted a Scientific American article that actually says we would need 46,000 square miles — one-third of New Mexico — not Gore’s 10,000 square miles, to do it — plus a rebuilt national grid and a comparably large system of energy storage.)

It’s true, the nation is now going through a windmill-building binge, fueled by a 1.45 cents-per-kilowatt federal production tax credit that makes it profitable without even bothering to sell the electricity. On top of that, almost half the states have now passed “renewable portfolio standards,” which mandate that utilities get X amount of their electricity from renewable sources (wind, solar, biomass, geothermal) by 20XX. This is what we used to call “unfunded mandates.” Legislatures want to promote renewable energy but they don’t want to pay the costs. So they make the utilities pay instead. The result is that electricity becomes more and more expensive.

California went through all this in the 1990s in the years leading up to the California Electrical Shortage. It had 10 percent renewables — the national average is 1 percent — and the most expensive electricity in the country before running out of electricity altogether in 2000. It solved the problem by frantically adding 12,000 megawatts (MW) of natural gas turbines in three years to make up for its shortages. But natural gas prices have gone through the roof and now California electricity is more expensive than ever. Manufacturing plants are leaving the state left and right and unemployment is almost the highest in the country. Now Congress is setting the whole country down the same path.

You can see in all this the essence of how government meddling promotes economic meltdowns. What happened with the subprime debacle? The federal government became obsessed with the idea that home ownership was good for everyone. It subsidized mortgages among people who couldn’t afford them, assuming some of the risk itself and forcing banks to take on the rest. Pretty soon the whole thing comes crashing down, carrying the rest of the economy along with it.

What’s happening with alternate energy is the same thing. Governments have assumed that windmills, solar collectors, and biofuels are the wave of the future. Therefore the only logical course is to hasten that future by subsidizing it and forcing utilities to adopt it ahead of schedule. What’s lost in this is that windmills are producing almost no useful electricity and will become a huge drag on the economy — just as biofuels have done nothing to reduce our dependence on foreign oil and have just led to hundreds of millions in wasted investments. Last week the New York Times reported, “VeraSun Energy, one of the nation’s largest ethanol producers, has suspended production at 12 of its 16 plants and is planning to sell production facilities. In recent days Renew Energy, Cascade Grain Products and Northeast Biofuels have filed for bankruptcy protection. Pacific Ethanol said it would suspend operations at its Madera, Calif. plant.”

Contrast this to the report in this month’s Nuclear News on the progress of the Japan Steel Works, the only company in the world that forges the huge steel pressure vessels that go into nuclear reactors. With 34 new reactors now under construction around the world, JSW is currently backed up four years but just announced a $350 million expansion. “While the recent world economic crisis has meant that business for some divisions of JSW is very sluggish, the nuclear energy division remains strong,” reported Nuclear News this month. Riding its nuclear division, JSW’s profits reached a record $385 million for FY 2009, 10 percent above 2008. “This trend is continuing,” said Nuclear News.

All the subsidies might eventually amount to something if windmills were ever going to provide us with useful energy. They will not. “Wind produces virtually no dispatchable electricity, which is what you need on an electrical grid,” says John Droz, Jr., a physicist who has been campaigning against wind in upstate New York. “It’s completely unpredictable and it doesn’t correspond to any periods of peak demand.” (Solar electricity does correspond with afternoon and summer peaks, which gives it some marginal value.) “All these wind farms are billed as producing 200 or 400 megawatts, but that’s only their nameplate capacity. They only deliver electricity 20-30 percent of the time at best. Because they’re so unpredictable, you can’t shut anything else down. You always have to have fossil fuel plants running as back up. You can claim you’re getting 20 percent of your electricity from wind, but the net reduction in carbon emissions or use of other fuels is zero.”

Last year the National Renewable Energy Laboratory released a now widely quoted report claiming we could get “20% Wind by 2030.” Yet even there the authors were careful to hedge their claims, calling wind a “generating resource” but not a “capacity resource.”

Incorporating wind energy into power system planning and operation will require new ways of thinking about energy resources.…Wind power cannot replace the need for many “capacity resources.” [Instead] wind capacity [is] installed to generate low-emissions energy but not to meet load growth requirements. [Emphasis added.] 

In other words, it’s nice to watch those 45-story structures going round and round but don’t count on them to produce any useful electricity.

What makes windmills even more impractical is that, because of their vast land requirements (125 square miles to match the average coal or nuclear plant), they must be located far from population centers. That’s why as soon as Gore or Friedman finishing painting a world run on wind and sunshine they tell you we have be rebuild the entire national grid in order to accommodate them. The current 345-kilovolt current grid, you see, loses about 10 percent of its power to heat and friction every 200 miles. What we need are 765 kV transmission lines that can carry electricity from remote Midwestern farmlands and East Coast mountaintops to cities around the country without too much loss. The cost of that will easily exceed $1 trillion.

But even that won’t be enough. In addition, we will need a storage system where power can be harbored for release during periods when the wind doesn’t blow or the sun doesn’t shine. Currently nothing exists except a few aquatic pumped storage plants that can store 20,000 MW, 3 percent of our 600,000 MW national consumption. In “A Grand Solar Plan,” the authors propose a national network of underground caves storing compressed air. That’s at least another trillion. A trillion here, a trillion there…

Without a doubt, there will soon be a huge shakeout in alternate energy business. It won’t be anything of the magnitude of the subprime meltdown, but the dot-com bust of 1999 is probably a good model. Of course legitimate businesses are in trouble everywhere and the dot-com bust at least left us with a solid telecommunications system and some thriving Internet companies. That’s what a bubble bursting does, separates useful enterprises from those that are just running with the crowd. The problem is an alternative energy bust is not going to leave us with anything useful. All these enterprises have been propped up by government subsidies from Day One.

For a pattern at useful energy investment, take a look at what is happening in Europe. Last week the Wall Street Journal reported that France, unlike the rest of the world, has not yet fallen into a recession. The reporter attributed this to France’s high level of government employment, but a much more likely explanation is France’s complete conversion to nuclear energy. With 80 percent of its electricity coming from nuclear and the rest from hydro, France pays the lowest electrical rates in Europe — and has the lowest carbon emissions on top of that. Nuclear electricity is the country’s third largest export — and the only thing keeping the lights on in Italy these days. Because it draws so much energy from nuclear, France imports only half as much natural gas as Germany and the U.K. In effect, it has achieved a measure of energy independence.

So it isn’t who spends the money or how much gets spent. It’s what you spend it on. If we were building a nuclear infrastructure right now — with our without government help — we would create lots of jobs, improve our technology and eventually develop a system that would give us cheap electricity and a measure of energy independence. Instead, we’ve put up a regulatory maze, plus the threat of endless lawsuits, so that even private capital isn’t enthusiastic about investing in nuclear. There are 34 reactors under construction around the world, right now, none in the United States. Nor is there a penny in President Obama’s stimulus plan to get the ball rolling.

Cheer up. Ten years from now there’s going to be a great business in tearing down 45-story windmills and selling them for scrap. That’ll create a lot of jobs and stimulate the economy.