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The Energy Spectator
The Next Subprime Mortgage Meltdown
(Page 2 of 2)
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.
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Pecos Pete| 2.17.09 @ 7:47AM
Good article. I particularly liked the closing paragraph...now I know where to invest...in companies tearing down wind generators.
It would be helpful if Mr. Tucker would provide more information about solar power in a future article.
Bud Hammons| 2.17.09 @ 7:53AM
When the politicos in charge are given the choice of buying votes or usable infrastructure with a "stimulus", you can rest assured they will take the former. The lawyers responsible for this nonsense have no clue about engineering, economics, and industry, but can count noses of their campaign contributors.
The barbarians are inside the gates.
v/r,
-- Bud
Pingback| 2.17.09 @ 7:56AM
Mortgage online » Blog Archive » The American Spectator : The Next Subprime Mortgage links to this page. Here’s an excerpt:
Pingback| 2.17.09 @ 8:03AM
» The American Spectator : The Next Subprime Mortgage Meltdown » Subprime Mortgage R links to this page. Here’s an excerpt:
AMightyWind| 2.17.09 @ 8:10AM
Liberals speak in generalities not facts, those are little porky things that just get in the way of the truth.
Pingback| 2.17.09 @ 9:00AM
blog here » The next sub-prime mortgage meltdown links to this page. Here’s an excerpt:
gp| 2.17.09 @ 9:01AM
Three mistakes in just the first page! 1) It's Barack, not Barrack. 2) "100 miles on a side" is 10,000 square miles, not 100,000. 3) "natural gas prices have gone through the roof" is no longer true; see http://futures.tradingcharts.com/chart/NG/M
Mike Cazayoux| 2.17.09 @ 9:05AM
I traveled recently throught that upstate NY "windfarm." Those turbines are huge! They tower over the landscape like a dispersed Manhattan skyline complete with twirling beenie caps. To think that the locals agreed to such a montrosity in their midst in return for a few tax subsidies is truely sad.
No way will Teddy allow that kind of visual pollution off of Hyanissport.
How bout them Frenchies by the way. They get a bad rap for their appeasing foreign policy and 35 hour workweek, but 80% nuclear! No more freedom fries for me. As a French-American I have reason to be proud once again. Vive la nuclear France!
John Navratil| 2.17.09 @ 9:16AM
To say that natural gas prices have not gone "through the roof" is true only with respect to the shocks. The underlying trend is that natural gas prices have double in the last decade and at yesterday's close of $4.60 at the Henry Hub, it ain't near as cheap as it was. This is the price which sets the electricity rates as it is the fuel which generates electricity at the margin.
corporate drone| 2.17.09 @ 9:35AM
It kinda begs the question... how about nuclear?
Dustoff| 2.17.09 @ 10:08AM
Maybe Al Bore should read up on EU great jump to wind-machies. Their not chearing about them anymore.
Also on the natural gas. What goes, will go UP!
Since obama has said no to drilling.
rr| 2.17.09 @ 10:26AM
I learned long ago that Liberals abosrb silly ideas like a sponge and never get rid of them. They have their prejudices like an addict has his dope, and they never reject them.
Solar and wind energy as primary sources of energy are fantasies, the stuff of college bull sessions.
Marc Jeric| 2.17.09 @ 10:40AM
When Carter a) nominated a Sierra Club lawyer and a Massachussetts consumer protection advocate to the Nuclear Regulatory Commission, and b) killed the Clinch River Reprocessing Plant, he in effect killed the nuclear power in this country. France, Russia, Japan, and Great Brittain have no problems with spent fuel and its storage - they reprocess that spent fuel, produce electricity, and generated new nuclear fuel for existing power plants. It is as close as anybody in history of science approached the ideal of perpetuum mobile. The 70,000 tons of nuclear "waste" now destined for storage in the Yucca Mountain Repository contains enough energy for 1500 years of US consumption, including 3% annual growth in demand. But for that we need several new Clinch Rivers reprocessing plants. Instead, we are pursuing solar power (cost $2/kwhr instead of 8 cents) and wind power (cost $4/kwhr) if we count the cost of energy storage when there is no sun or no wind.
It is of interest to note that our "nukelar engineer" Carter finished last in his Navy Academy class, was never allowed to step on a nuclear submarine, and was tasked only to schedule regular turnovers of those submarine personnel. When leaving the Academy Admiral Ricover asked him if he, Carter, did his best. The moron answered "No", and the admiral asked him "Why not?". Carter then wrote a book entitled "Why not the best"? I mean - if that is not the proof of utter idiocy, what is?
Deborah| 2.17.09 @ 11:08AM
They say the road to hell is paved with good intentions. In this case the road to our country's demise is paved with liberal insanity.
Thanks for the heads up, Mr. Tucker. If the country survives the next several years of liberal rule (and I do mean rule) we'll be carrying on our backs the weight of the decisions made in this "stimulus" bill. Hugo Chavez has nothing on this adminstration.
dcd| 2.17.09 @ 12:08PM
If nuclear is such a profitable idea and government money only messes things up, then why does the nuclear industry want fat government subsidies?
Astro| 2.17.09 @ 12:52PM
In general I agree with the tone and conclusions of this article. However, one statement that tries to inject some facts strikes me as rather vague and unbelieveable:
"The current 345-kilovolt current grid, you see, loses about 10 percent of its power to heat and friction every 200 miles."
Electrical power losses are due to impedance, which can create heat. (Impedance is similar to resistance, with inductance and capacitance also involved.) Saying 'friction and heat' is both incorrect and redundant; while mechanical friction does generate heat, friction is not the same as impedance.
Also, I find the claim that the grid loses 10 percent of its power every 200 miles as an unbelievably large figure, implying a extreme amount of energy loss. But nevertheless, the distance problem is not that bad, since a power station merely has to feed the nearest node in the grid. It's not as though a separate set of powerlines must be built from Colorado to New York for every windfarm there.
American Socialist| 2.17.09 @ 1:42PM
Everyone is so misguided on this Web site.
Come join us! Become a socialist!
http://www.sp-usa.org/
Deborah| 2.17.09 @ 1:56PM
Yeah, that's gonna happen, Mr. Socialist.
Socialism leads to communism. We're not the USSA yet, we prefer to fight.
Freeranger| 2.17.09 @ 2:38PM
Good article.
Marc Jeric: Perhaps you'd like to think liberals are dumb, but they aren't. Political leanings are not correlated with intelligience. Carter did well at the Naval Academy, finished about 60th out of more than 800. Whatever else you think of Carter, he's smart...and so were Marx and Lenin. Never "misunderestimate" your adversary.
John Navratil| 2.17.09 @ 2:52PM
Friction is not the appropriate term, but for the layman it is descriptive. The resistive losses do generate heat (like friction) and dissipate the electrical power. This can be reduced by upping the voltage and reducing the current (explain that to the layman) but at some point corona discharge limits this as well.
The 10 percent every 200 miles bears scrutiny as well as the estimates I have seen are that the grid looses 6% to 8% of transmitted power (40% through line losses and 60% through transformers). However most power plants are not 200 miles away from their major service area. Still a quarter wave length transmission line looks like a direct short and the further away the source is from the demand, the greater the losses.
That said, there aren't that many people living in the Texas Panhandle where this power is generated. So how much of it will get to the end user is a legitimate question.
American Socialist| 2.17.09 @ 3:17PM
Deborah, under socialism, you don't need to fight; we'll be one happy family.
Under Republicanism, your son will die in a massacre outside of Baghdad, his body burned and dragged around the streets of the city, then hanged from the nearest tree.
Pingback| 2.17.09 @ 3:35PM
Shopfloor » Blog Archive » In a Blackout, It Doesn’t Matter if Your TV is Digital or links to this page. Here’s an excerpt:
Oregonian| 2.17.09 @ 4:00PM
American Socialist
It's always refreshing to read what passes for a well-reasoned position in the progressive world. Apparently Keith Olbermann must be on vacation and the Huffington Post must be down for repairs, so you have decided to prove once again to American Spectator readers that "liberal intelligence" is an oxymoron!
American Socialist| 2.17.09 @ 4:07PM
Oregonian, you dimwitted fascist, you can kiss my ass!
Nick| 2.17.09 @ 4:30PM
"AMERICAN socialist" is also an oxymoron!
Oregonian, you forgot Wesley Crusher- I mean Rachel Madcow and Chris Matth-spews.
I would become a liberal/socialist if only it didn't require a labotomy!
whyyeseyec| 2.17.09 @ 4:34PM
American Socialist
Hugo Chavez is looking for a butt kisser......I hear you`re good at that
Mike| 2.17.09 @ 4:41PM
Hey dimwitted American Socialist try to keep your insults straight. Fascism is socialism, as in national socialism. There are no totalitarians over here on the right. Just us warriors for liberty.
Roy| 2.17.09 @ 4:46PM
dcd:
Why does the nuclear industry want fat government subsidies? Because everybody wants fat government subsidies who isn't a libertarian ideologue. Above and beyond the socialist economy(where all wealth is put into a pot and distributed by all wise bureaucrats) and the free economy(where all wealth is kept by those who generate it) is the "me" economy(where all wealth is put into a pot and distributed to me). Everybody who is just maximizing their own self-interest will choose the "me" economy and the nuclear industry is no exception.
The question is whether nuclear energy would be profitable without the subsidies, if the government just got out of the way. I haven't hear Tucker make that argument. So it's still about what we can persuade our master, Al Gore(acting through his acolyte, Barack Obama), to let us build. Would it be easier to persuade them to let us build nuclear or coal plants? That's a political/psychological question that has a fairly small amount to do with which source is objectively better.
Dustoff| 2.17.09 @ 4:55PM
American Socialist
+++++++++++++
Yeah, Hilter did such a good job right. O brother.
Bullwinkles| 2.17.09 @ 4:57PM
American Socialist:
" Deborah, under socialism, you don't need to fight; we'll be one happy family.
Under Republicanism, your son will die in a massacre outside of Baghdad, his body burned and dragged around the streets of the city, then hanged from the nearest tree. "
-------------------------------------------------------
One big happy family of those who are not imprisoned. Better Baghdad than Farmingdale.
dcd| 2.17.09 @ 5:25PM
The question of subsidies is where nuclear gets the most interesting. The nuclear industry wants subsidies for construction, operation, waste disposal, and risk avoidence. How can the profitability and efficiency even be assessed with such a distored demand. If they can make money without the government cleaning up their mess than more power to them, otherwise it is as foolish as subsidizing ethanol.
American Capitalist| 2.17.09 @ 5:33PM
American Socialist:
What, are you 12 years old or something that that is your best response to Oregonian?
And you, my friend, are the fascist. All fascist regimes (Hitler, Mussolini) had socialist cores, socialism at the end of a gun. But you probably did not know that being edumacated at a government school. Go back to playing with your Wii.
Avitar| 2.17.09 @ 5:49PM
I'm pretty sure that American Socialist was being sarcastic. At least I hope he was. I realize that there are people who do not that NAZI translates as Patriotic Liberal Labor Union party in English but he seems too intent on pushing buttons to be that ignorant.
Thomas| 2.17.09 @ 5:50PM
dcd,
As Roy pointed out, we live an era of OPM [other people's money]. Why use your money when you can get it from someone else? And the biggest source of OPM is , you guessed it, the GOVERNMENT.
Now, nuclear power has a lot of risk. And almost all of it comes in the form of government intervention. Between environmental impact studies, government permitting and lawsuits filed by the eco-freaks; not only would it take years to even break ground for a nuclear plant, but it might never get built. This all conspires to make financing a nuclear powerplant a bit of a risk.
As to transmission loss over great distances, this is already being addressed by a number of firms. As generation costs increase, transmission losses cut deeper into the bottom line.
Oh, one other thing about nuclear as opposed to the "green" power generation methods. The nuclear footprint is a few acres, at best. Wind and solar are thousands of square MILES. Think about it.
dcd| 2.17.09 @ 8:13PM
As noted above solar is most productive during high demand period, further interesting technologies (see vanadium battery) would permit each house to store and release energy on demand. This along with more built in grid intelligence would permit a reverse auction of energy that could start showing some real gains in efficiency and cheap power.
MisguidedinPhoenix| 2.17.09 @ 10:02PM
American Socialist| 2.17.09 @ 1:42PM
Everyone is so misguided on this Web site.
Come join us! Become a socialist!
http://www.sp-usa.org/
--Come on over to my house ! I have a big surprise for you ! I'll give you a hint as to what the surprise is: It's big, makes a very loud noise, and sure makes a mess of Socialists...!
Astro| 2.18.09 @ 8:56AM
Update on my earlier comment.
I wikipediad the power losses in the US grid. The wiki article used a figure of less than 8% [1995 data] for the entire grid (which is believable), so the quoted value of 10% per 200 miles is too large by far.
Note to American Socialist: Congratulations on your threadjack, you managed to get a lot of people to respond. Nevertheless you're still a moron; try selling crazy somewhere else.
Note to Everyone Who Responded to him: In the long run it's better to ignore trolls so they'll go away; responding to them just feeds them.
John Navratil| 2.18.09 @ 9:18AM
(Picking nits!) An average loss of 8% power across the grid and a 10% loss per 200 miles are both true when the average distance between power station and average consumer is 160 miles.
Most power stations are located near their consumers. If not for the cost of losses, we wouldn't need to transport coal. We would just generate the power at the coal mine.
American Socialist| 2.18.09 @ 12:34PM
Jesus was a socialist, you dumbasses!
Energy analyst| 2.18.09 @ 2:55PM
Is this article serious? There are a shocking number of errors and inaccuracies.
First of all, the wind tax credit is at ~2 cents, not 1.45 cents. Second of all, the tax credit is given based on actual production of electricity, so it is absolutely false to say that developers can make a profit without selling electricity (not to mention that nobody can make a profit selling electricity at 2 cents/kWh except maybe fully amortized hydro projects).
The referenced NREL study is simply making the point that wind alone cannot supply all of our electricity due to its intermittency, and that some amount of baseload generating capacity is still needed. However, this really only becomes a serious issue when wind approaches about 20% of the installed capacity on a grid, and we're far from getting there in the U.S.
Nuclear may indeed be a good choice for sustainable energy production, but it doesn't mean that it is sufficient on its own.
If the author would like to be taken seriously on energy issues, please make some effort to present actual facts. And don't begin articles with non sequiturs about male prostitution.
h| 2.18.09 @ 3:18PM
Nuclear energy needs to reflect the true cost of production. Inevitably omitted is the cost of storing spent radioactive materials safely for tens or hundreds of thousands of years. Should this storage cost be factored in to the cost of Nuclear power generation, (instead of letting the taxpayer pick up the bill) how cost effective would it really be?
American Capitalist| 2.18.09 @ 5:12PM
American Socialist:
Too many magic mushrooms seem to have left you addled.
Don't confuse the Christian ideals of charity and service, which are personal acts of free will, with socialism. Using the government to force me to be a slave to others, by taking the fruits of MY labors and giving them to those who did nothing for them, so you can feel good about yourself, has nothing to do with Jesus and is not charity or goodness on your part. Liberals and leftists are good at being generous with other people's money, but are notoriously stingy with their own money. The current administration is a good example.
So why don't you go and change your bong water, have your yearly bath and think about it.
Pingback| 2.18.09 @ 6:12PM
The next bubble to burst | Constructionpundit links to this page. Here’s an excerpt:
May Pelletier| 2.18.09 @ 7:20PM
Not until a wind farm is allowed where a Kennedy may have to see it, will alternative power be a reality. "Not in my backyard" says the elites Put them with the gun lovin' trailer trash.
There is only one clear solution. Get the conservatives back in or quitchurbitchin'.
Ted| 2.18.09 @ 11:14PM
GP:
"Barrack" was a misspelling. But Tucker's area calculation for a 100 miles squared was 10,000 square miles (not the 100,000 square miles as you assert). That general natural gas prices have subsided (not necessarily the case for California) provides no meaningful counterpoint given the recent overall reduction in demand. So, given your incorrect corrections on the relevant points, do you agree with the author?
Alan Brooks| 2.18.09 @ 11:40PM
Nuke is it
A Dumb down SOCIETY| 2.19.09 @ 7:45PM
Politics is controled by the puppet master. Till people grow up and begin to run their own life, they are lost, fight no war, your war is to survive.
It's the only war worth fighting for. GET YOU GUNS, you may need it.
Pingback| 6.19.09 @ 9:20AM
The American Spectator : The Next Subprime Mortgage Meltdown | Business News links to this page. Here’s an excerpt:
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