Friday, November 26, 2010

Bad Government + Bad Bankers = Bad Energy

image: ElectronRun

According to a story in the NY Times, "Cost-Saving State Law Endangers Growth of Wind Industry," wind farms on the drawing board in Illinois might stay there, unbuilt, even though they are licensed by the state and financing is line up. Why? Because the Illinois Power Agency is committed to buying power at the lowest rate it can. It doesn't have a choice, that's the law. Even if that energy must be piped in from out of state, with all the attendant efficiency losses. Not to mention delaying the transition to cheap, clean electricity sources (especially if you include the cost of cleaning up heavy-metal-laden coal ash heaps).

Why? Because the wind farm developers can't get financing from risk averse bankers unless they have a commitment from Illinois to buy the power the wind farms produce for many years out. And new wind farms have capital -- and financing -- costs they need to cover, so their power is incrementally more expensive than established, out of state competitors. Eventually those investments will be paid for, and the banks paid off, so the cost of energy from the new Illinois wind farms will drop, too. But none of that matters.
"Mr. Deora said a failure to invest in new wind farms could lead to higher electricity rates, especially if stricter air quality laws, public opposition and aging equipment mean the closing of coal plants that now provide the majority of the state’s energy."
 This is just dumb, and could be fixed with a stroke of the pen. Will it? Who knows?
"Mr. Borgia, of the Illinois Wind Energy Association, said the Illinois Power Agency’s contracting structure was created to protect ratepayers in the bulk purchase of electricity from all sources, not to deal specifically with renewable energy or to facilitate new wind development.
Hence, wind experts say, Illinois’s wind procurement process is exceptionally complicated and inefficient.
'The contract wasn’t designed for this process,' Mr. Borgia said. 'It’s like using a water-slide contract to commission a wind farm. You could do that, but why would you? Why wouldn’t you use a wind farm contract?'”
We need leaders, not politicians. Otherwise, the future is never gonna happen

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