So here we are in the final two months of a U.S. general election, and energy has become a “wedge issue,” separating the two candidates. Mitt Romney’s position is that he will remove the subsidies on clean energy and help the oil and gas industry make the U.S. energy independent by 2020. The president’s position is that “all of the above” energy sources are needed, including continuing support for clean energy.

Much renewable energy coverage focuses on the issue of cost – how much more it costs than conventional energy. On Sept.10, the Wall Street Journal carried an op-ed with the headline: Corporate Cronyism Harms America, by Charles Koch (I know, you couldn’t make it up). In it, he states that “the government is pushing up energy prices for all of us – five times as much in the case of wind-generated electricity.”

It is an extraordinary claim, with no evidence supplied to support it. Bloomberg New Energy Finance’s regular levelized cost calculations – based on real data from folk who build clean energy projects – show that wind energy is in many cases competitive with new-build coal capacity. Wind is also nearly competitive with new-build gas capacity if you use a gas price rising quickly to $4 and then on $6 per million British thermal units, as the futures curve suggests you should, rather than the current spot price of $3. In the Brazilian energy tenders, we saw unsubsidized wind bid in at lower prices than any other energy source, and there are project developers in Mexico looking to build wind farms with no subsidy.

In March 2011, Danish economist Bjorn Lomborg wrote in USA Today that solar PV was 10 times as expensive as fossil-based power. By February this year he had retreated to claiming solar was just four times as expensive. The truth is that in more and more markets rooftop solar power is cheaper than daytime retail energy prices. In Spain and other countries a number of project developers are looking to develop solar projects without subsidies. Solar PV is cheaper than kerosene for lighting, and solar is cheaper than oil and diesel for power generation anywhere in the sub-belt.

In the U.K., there is an increasingly desperate campaign, funded and led by Donald Trump, to claim that renewable energy – and wind power in particular – is driving up utility bills, despite government statistics that show two thirds of the increase is due to increases in gas prices.

Levelized costs are not the whole picture. As the cost of photovoltaic modules, wind turbines, batteries and all other clean energy equipment has tumbled over the past few years, advocates of fossil fuels have started to highlight the cost of intermittency, either in terms of additional back-up or grid capacity required, again in many cases making outlandishly inflated claims.

Clean energy advocates, for their part – when not distracted by a relatively small $4 billion per annum of tax breaks for the fossil fuel industry – have done their best to highlight the externality costs of fossil fuels. These are costs which are not borne by the fossil fuel producers or their clients, but by society at large. I have written elsewhere about the Rand Corporation estimate that U.S. taxpayers spend $83 billion per annum to police the Straits of Hormuz, the academic finding that the health costs of coal-fired generation in the U.S. might be as high as 10 cents per kilowatt-hour. These sorts of figures are substantial enough to shift the economics in favor of clean energy entirely.

Energy is shaping up to be one of the key battlegrounds of this presidential campaign, and this is to be welcomed. At Bloomberg New Energy Finance, we have always done what we could to promote transparent, fact-driven analysis. Let companies and countries make whatever choices they need, let the technology chips fall where they may, only once there has been a well-informed discussion about the different options.

WATER RISKS

We are not quite there yet in the U.S. Presidential debate. For one thing climate change has been surreally absent so far, despite this year’s unnatural heat-wave. How many sleepless nights have the president’s pollsters had, trying to work out whether a clear statement on climate change would break his way or stall his progress in the polls? The other critical issue missing from the U.S. presidential election battle is water – particularly as U.S. Drought Monitor reports that nearly two thirds of the nation is now suffering from moderate to exceptional drought conditions.

Coal, gas and nuclear power generation all use large amounts of water. Of these, nuclear is the thirstiest – though many plants are on the coast, using seawater rather than fresh water. Our analysts reckon that a U.S. combined-cycle gas turbine plant of around 450 megawatts could consume 74 million cubic metres of water over its lifetime, and a coal-fired power station of 1.3 gigawatts no less than 1.4 billion cubic meters. The latter figure is seven times the annual water consumption of Paris.

By contrast, wind and PV generation use very little water. The renewable technologies that do need a drink are solar thermal electricity generation, biomass and waste-to-energy, geothermal and – in a more direct sense – hydro-electric.

Planners of thermal energy plants have two things to worry about. One is that droughts and rising waterway temperatures could hit generation, causing shutdowns and power outages for consumers. In 2003, during its famously lethal heat wave, France had to cut back 16 gigawatts of thermal production capacity. In April 2010, Maharashtra State Power Generation shut down 90 percent of its 2.3-gigawatt power station in Chandrapur, about 520 miles east of Mumbai, after low rainfall caused water levels to plummet at the Erai dam. In August of this year, the Millstone nuclear plant in Waterford, Connecticut, had to shut down one of its two reactors because its seawater cooling intake was too warm. Other U.S. plants have, this summer, had to operate at lower power outputs or receive special waivers to operate at temperatures above what their normal safety rating would allow.

The other water-related risk to the economics of thermal capacity is that water pricing becomes, in the fullness of time, rational. Water is generally a highly subsidized commodity meaning consumers are today largely insulated from the true impact that supply and demand could have on pricing. Were that to change, and were prices allowed to respond to power sector demand, they would inevitably rise, causing pain to consumers while piling extra costs onto the thermal power plants themselves.

Bloomberg New Energy Finance’s water team has been working on these issues for nearly two years. In Europe we found that the power sector accounts for 44 percent of total water withdrawals in the region, and 8 percent of consumption – mainly evaporation in cooling towers. China already faces a water shortage of 40 billion cubic meters per year, yet coal-fired generation is expected to increase 43 percent by 2020. It already accounts for around 60 percent of total industrial water demand. Peter Evans, director for global strategy and planning at General Electric Co., was quoted at a Tokyo conference saying that utilities in Asia are “assuming the water is there. They actually will not be able to build as many coal plants as the projections suggest.”

Last December, Dipuo Peters, energy minister of South Africa, announced preferred bidders for more than 2 gigawatts of solar and wind capacity, saying that the move was a “demonstration of our departure from being associated with greenhouse gas emissions, high water usage and other environmental degradation.” In Saudi Arabia, one of the main drivers of surging electricity demand is desalination – itself very energy intensive. The 9 gigawatts of wind being developed by Saudi Arabia as part of its strategy up until 2030 will solely be dedicated to powering desalination. So renewables are being used to provide water, but also to save it – because the alternative would be more water-thirsty generation options such as oil or gas, or even nuclear.

POLICY

There are signs that policy-makers are increasingly prepared to see water use by the energy sector as something that should incur an appropriate cost. The European Union is currently undertaking a review of its water policy goals as part of its Blueprint to Safeguard Europe’s Waters. Greater enforcement of metering and more sophisticated tariffs that better recognize the economic worth of water resources are expected to be an outcome of this process.

Our Research Note, Renewables In Europe Rain On Water Scarcity’s Parade, published late last month, found that the chances of the power sector causing a water depletion crisis in Europe was receding – in part because of the increase in the penetration of renewable energy. It showed that water consumption by Germany’s power sector could fall by nearly half by 2030 because of the use of solar and wind.

Back in the U.S., the energy sector’s use of water looks set to soar despite the deployment of renewable energy, and that is because of non-conventional gas. While shale gas has become a live political issue in the U.S., coverage has almost purely focused on the issues of fugitive emissions, ground-water contamination, and whether the process should be regulated at a federal or state level.

What has not been debated is the actual consumption of water. Chesapeake Energy Corp. reports that drilling a deep shale gas well requires between 65,000 and 600,000 gallons of water, but the fracking process requires an average of an additional 4.5 million gallons to be injected per well at high pressure to break up the rock. Multiply this by the hundreds of thousands of fracked wells which will be required to meet increased gas demand in the coming decades, and that’s a lot of water. Some may be reusable, as long as the salinity is not too high, while some may require a significant amount of wastewater treatment.

Supporters of fracking like to compare its water use with that of corn ethanol – not exactly a poster child for the rational, fact-driven deployment of clean energy. The real comparison should be between gas-fired generation based on fracking, and wind or PV. On that count, the water factor comes down strongly in favor of renewable energy.

Not surprisingly, the energy sector incumbents are fighting back. As data on the increasing competitiveness of clean energy – along with concerns about job losses in the wind industry if the Production Tax Credit is allowed to expire – has helped it make gains in the presidential ground battle, so the fossil fuel industry has called in massive air strikes. By the middle of September, the New York Times reports, an estimated $153 million had been spent on television ads promoting coal, oil and gas, compared to just $41 million on clean energy. When you have a system in place which transfers hundreds of billions of dollars per annum of costs from you and your clients to the taxpayer and the general public, you do whatever it takes protect it.

As they work the corridors of power, promoting unfettered reliance on coal, gas, oil and nuclear power, defenders of the status quo may want to bear in mind the words of W. H. Auden: “Thousands have lived without love, not one without water.”

By Michael Liebreich
Chief Executive
Bloomberg New Energy Finance

Wind study money better spent on moving away from dirty energy

It’s curious Health Canada has taken an interest in studying the health impacts of something as benign as wind energy when for years health and environment experts have been cautioning about the negative impacts of fossil fuels on human health.

Medical authorities in Canada and around the globe have given wind energy a clean bill of health, making Health Canada’s proposed study superfluous — a waste of time and a waste of public funds. The medical community is confident wind turbines are safe and they produce no toxic emissions and no radioactive waste.

When you harness the wind to create electricity, you are not relying on dirty fossil fuels that pollute our air and water and fill our lungs with asthma-inducing, cancer-causing, neurologically harmful pollutants.

For these reasons, Canada’s health community is asking: Why not spend our tax dollars to help transition away from dirty coal, nuclear or the tarsands?

In a 2010 report, Ontario’s Chief Medical Officer of Health reviewed 40 years of scientific research on wind turbines and human health. Dr. King’s report concluded “the scientific evidence available to date does not demonstrate a direct causal link between wind turbine noise and adverse health effects.”

She also found that “Community engagement at the outset of planning for wind turbines is important and may alleviate health concerns about wind farms.”

This puts any physiological impact from the very ordinary sound of a windmill into serious doubt.

On the flip-side, Canada’s health community is shocked at the growing evidence of illness connected to the fossil fuels industry. In 2009, the Alberta Cancer Board reported cancer rates in Fort Chipewyan, downstream from the tarsands, were 30 per cent higher than expected. Yet our federal government continues to allow tarsands operations to expand at an alarming rate.

According to the Ontario Clean Air Alliance, in 2009 Ontario’s coal plants were connected to 246 deaths, 342 hospital admissions, 406 costly emergency room visits and almost 123,000 illnesses such as asthma attacks. We are certain of the health impacts of coal and applaud the Ontario government for their precedent-setting commitment to shutter their plants in 2014 and encourage them to close them sooner. But we are still burning coal in Alberta, Nova Scotia and Saskatchewan and the federal government has shown no leadership to help transition to a clean energy mix.

Nuclear plants are notorious for their radioactive waste. This industry’s spent fuel remains highly toxic and radioactive for thousands of years. But nuclear reactors, even in their normal day-to-day operations, emit radiation. A 2008 German government study found an elevated risk of leukemia for children living within five kilometres of the country’s 16 nuclear plants. Without the threat of a natural disaster, calculated attack or human error, nuclear energy puts our health — and especially our children’s health — at risk.

Any form of energy production inevitably has some negative impact on the planet. Wind turbines are not perfect. They generate some sound and their appearance is not pleasing to everyone.

But coal-fired generating stations, nuclear power plants and the tarsands all contribute to serious illness. We’re comparing a minor annoyance from the sound of blowing wind to the severity of cancer, asthma and brain damage. Our energy choices do impact our health and renewables like wind are our safest bets.

Farrah Khan is interim executive director, Canadian Association of Physicians for the Environment

Apr 2 – McClatchy-Tribune Regional News – Julie Buntjer The Daily Globe, Worthington, Minn.

The wind turbines scattered across southwest Minnesota have made a tremendous economic impact on the region, from construction crews settling in our communities to payments made to landowners for easements. Perhaps the greatest economic impact, however, is now being seen in counties where turbines harness the wind and convert it into kilowatt hours.

Each year, as Minnesotans busily prepare their income tax returns, the wind energy companies who have erected towers here are reporting to state officials the total number of kilowatt hours the turbines have generated during the previous year.

For each kilowatt hour produced, the county where the turbine stands gets 12 cents. That may not sound like much, but it adds up — to $827,190 for Nobles County alone in 2012. The wind energy tax revenue for the county grew by nearly five-fold just since the year prior, when revenues came in at $171,620. The added tax revenue is a direct result of significant expansion in wind farms in the county. To date, there are 163 turbines operating here.

Still, Nobles County is far from leading the way in the region. Our neighbor to the north, Murray County, gets that honor, with $1,389,901 in wind energy tax payments coming in this spring. Jackson County, to the east, comes in second with $1,153,006 in wind energy tax collected.

Pipestone County, even though it is home to more wind farms than other counties in southwest Minnesota, will collect $577,091 this year. Many of their turbines, some of the first to appear in the region, were installed before new technology and larger megawatt towers were developed.

Cottonwood and Rock counties trail with significantly less wind energy tax revenue, although a major wind project is planned in Rock County this year — a project that will impact their revenue stream in a couple of years.

In each of the counties, the wind energy tax revenue is divided with 80 percent going to the county coffers, and the remaining 20 percent to the townships where the turbines are located. In Nobles County, Larkin, Worthington, Ransom, Wilmont, Summit Lake, Olney and Dewald townships will share in more than $34,000 this year — money they can use to improve township roads and lower taxes for residents. The counties spend the money the same way. Nobles County Board chair David Benson said while the wind energy production tax revenue goes into the general fund, he’d like to see commissioners direct the money to road improvements. For several years, the county set a portion of its annual levy specifically to build up a road account. “This is our first big payment and it will grow,” Benson said. “My goal is to emphasize road work.”

Still, he’s quick to say the money won’t go far. The county’s 2012 share will be $661,752 — enough to do just a couple miles worth of road construction, he said. Benson hopes to plan a work session within the next month so commissioners can decide what they should do with the income. Nobles County Auditor-Treasurer Sharon Balster said the payments won’t all be in until mid-May. In other counties, much of the wind energy tax revenue will be used to offset property taxes.

“Indirectly, it benefits the county in many different ways,” said Pipestone County Administrator Sharon Hansen. “It’s an indirect benefit to all of our departments. We think it benefits property taxes at the end of the day, and that’s what we use it for.”

In Murray County, wind energy tax revenue initially was used for capital improvement projects in the years levy limits weren’t in place. The Murray County Fairgrounds was a major benefactor, with a new grandstand and concession stand built there in recent years.

“Some of these projects, probably without that tax, we weren’t able to do,” said Murray County Auditor Heidi Winter. This year, Murray County Commissioners decided to use the funds to offset property taxes.

“It hasn’t been earmarked for specific purposes,” Winter said of the money. “Some of the townships get a hefty amount. We encourage them to continue to levy because, for one, they get a township road allotment from the state and they have to levy a certain value to get this … allotment.”

Townships also have to cover the road maintenance costs, and the trucks that travel the roads to the towers do cause damage.

Jackson County Coordinator Jan Fransen said her county will get approximately $922,000, with the townships where turbines are located sharing in $230,000.

“Annually, we designate the first $350,000 to tax relief,” Fransen said. “This year, the board, by resolution, increased that to $450,000 because of the market value exclusion.”

As for the rest of the money, she said Jackson County Commissioners are talking about putting it in a capital improvement fund, perhaps for the construction of a new highway maintenance facility.

“There’s no official action yet,” Fransen cautioned. The current maintenance building was used as a hemp plant during World War II.

“It’s pretty old,” she said. “It’s something we’ve been looking at for many years. We’re looking at a joint facility with the city of Jackson.”

The idea being discussed is to issue bonds for construction of a new facility, and then use the wind energy tax revenue to repay the bonds.

Of course, each of the counties making plans for how they might spend the tax revenue still hinges on the Minnesota legislature. If the state decides to impose levy limits on counties again this year, many would have no choice but to use the funds for general operating costs.

In Nobles County, Benson has been a staunch supporter of trying to get the wind energy production tax into freestanding legislation that would ensure the tax payments would continue regardless of other legislation. If levy limits are placed on counties, they still get the wind energy tax, but they have to reduce their levy by whatever
they get in wind energy tax revenue.

Benson has been pushing to get the legislation heard by the state house tax committee, but chairman Greg Davids, R-Preston, has so far refused to hear their request. The Senate tax committee heard the requests last week. Hansen said she, too, is concerned about levy limits.

“(The wind energy tax) is very important to us because of how it assists our property taxes,” she said. “We’ve been working with the SRDC (Southwest Regional Development Commission) to ensure there isn’t a loss of revenue in any way, shape or form.”

Daily Globe Reporter Julie Buntjer may be reached at 376-7330.