August 10, 2010

Coakley backs Cape Wind-National Grid contract - The Boston Globe

Coakley backs Cape Wind-National Grid contract - The Boston Globe:

The Massachusetts Attorney General recommends the wholesale pricing to National Grid for new electricity from the 130 turbine Cape Wind installation which is expected to be built and operating by 2013. This is a significant wind energy project that has been bitterly opposed by several parties including Ted Kennedy when we was a Senator as well as Associated Industries of Massachusetts and various Indian tribes.

The scale of the project makes sense, but the pricing Coakley recommends at 18.7 cents per kilowatt-hour in 2013 increasing 3.5% annually will produce a wholesale price in 10 years (2023) of 26.38 cents per kilowatt-hour, a hefty 41% net increase.

By any accounting, that's costly electricity considering that I pay 13.84 cents per kilowatt-hour retail with Green Mountain Power.

Offshore industrial scale wind energy is very expensive, assuming this project represents a realistic price for the project to be profitable including the government subsidies. This project will demonstrate the operating feasibility and costs of off-shore wind power for the first time in the United States.

The Globe story portrays this deal as producing only a modest price increase for National Grid retail customers, but fails to include the 10 year price reality. Will the costs of electricity from all industrial scale sources rise by this amount? It seems that's only likely with implementation of a carbon tax in some form which would provide a substantial restraint on national economic growth.

In any event, a couple of decades of experience in northern Europe/Scandanavia has shown that electricity from wind accounts for only 9% of total electric production and that result is only possible by large investments in the grid and inter-country load balancing. Overall electricity costs are three times higher in Denmark, for example, than in France which opted for a nuclear generating capacity which produces the lowest cost electricity in Europe.

Americans should be skeptical of green energy advocates' claims that wind (and solar) is all a wonderful deal for the country given the experience of other countries.

"Late last month, Coakley got National Grid and Cape Wind to reduce the base price by 2 cents a kilowatt-hour, to 18.7 cents, with it rising 3.5 percent annually over the life of the contract. The altered deal, which Coakley described as “in the public interest,’’ still needs to be approved by the Department of Public Utilities.

Under the revised contract, National Grid electricity customers who use an average of 600 kilowatt hours of power a month would pay just under $1.50 more on their electric bills in 2013, when the contract begins, according to estimates provided by the utility. That’s about 40 cents less than what the original contract would have cost."
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