Cape Wind Gets Approved, Maybe

The 130-turbine wind farm off Cape Cod that Ted Kennedy worked so hard to block for ten years finally got approval. Kennedy, worried over it spoiling his views off his Cape Cod retreat, claimed he opposed it because corporations would benefit. Huh? The only difference with this boondoggle from others is that it occurs in Ted's back yard. 

There is something really cool looking about this picture of future offshore wind turbines stretching into the haze of a lazy summer afternoon off the Cape. This is an area of extraordinary scenic beauty, plenty of boaters, and lots of commercial traffic. While it may have worried the Kennedy's for the hypocrisy, they had a point. Of all the places to build the first offshore farm, why pick this one? 

The the turbines would be 5 miles offshore, where promoters say "we have a lot of wind." You can follow their wind conditions here. They may be right, but they only recently put up a wind monitor there. One of the wonders of Cape Cod is how unpredictable the weather can be. The America's Cup races used to be run near here, and were plagued with light, unpredictable winds. I wonder how Cape residents will feel when they find the wind dies during hot summer days, with the common Bermuda Highs, even as it blows too hard during those famed Nor'easters in winter, when they rely on heating oil not electricity? As a weather guide says:

In June, July, and August the thermal winds of Kalmus Beach kick in and account for 99% of the wind statistics for these months in the season. The rest of the Cape may have shut off by this time.

Kalmus Beach is the beach off Hyannisport, the locale of the Kennedy Compound. The only place this project made sense is in the Kennedy back yard!

The turbines would stretch over an area the size of Manhattan, right in the middle of a lot of traffic: the ferry to Nantucket will go along one side, the ferry to Martha's Vineyard goes along the other, and the main shipping channel goes along the bottom side. They will not only see the turbines, they will hear them: large windmills make lots of annoying, high-ptiched noise. Maybe it is a good thing that the wind often dies during tourist season. 

The turbine part costs a cool $1B, but the grid upgrades would cost $10B. The promoters want to dump the grid costs onto the public. As consequence this approval simply shifts the fight from the Federal level to the State. 

Since the buildout will probably take as long as the Big Dig that went through Boston - a fiasco that became the most expensive highway project in US history, almost 10x over budget - there will be plenty of chances to scuttle it, and lots of waste for Kennedy's feared "corporations" to take advantage of. The Big Dig had huge problems and is plagued with substandard materials. 

Offshore wind also is more expensive than onshore, roughly 2x for the turbines, and much more for the grid. It is difficult to ever see it paying off, since the unreliability of wind requires backup capacity to be built alongside the turbines and grid, typically done with natural gas. Those plants end up under-utlized, which raises electricity costs due to the amortization of capital costs rather than lowering them due to lower operating cost of renewable energy. 

Wind in general has been a super boondoggle, producing much less energy than expected, wearing out faster, killing birds (lots of birds) and causing health problems (from noise for people who live within a mile). In Texas, the leading wind power state, the actual energy generated is less than 10% of potential. Worse, those winds that sweep the flat parts of Texas tend to fail just when they are needed most, on a hot and humid summer day in Houston. 

No surprise then that wind farms only get built with massive subsidies. 

Comments

[vipul garg]

a recent article in newsweek was telling about the wind and solar energy.how much money is wasted in subsudies over these apparently green sources is no joke.
maybe the way to go is nuclear like france and others.

[Michael]

Highest percentage of Bullish Newsletter writers for the year, according to Investor's Intelligence reported as of yesterday at 54.0%

Bearish percentage is down to 18.0%

http://www.schaeffersresearch.com/streetools/market_tools/investors_intelligence.aspx

[Wave Rust]

Congress should build an in-house wind farm, and, a methane collection system.

We'd be energy independent for centuries.

wave rust

[Michael]

If anyone has doubts about the strength of the US and Global Economies at this juncture in the recovery, I would strongly suggest that they take a look at Peabody Energy's recent earnings report this week and the fact that they have left much of their coal production unpriced . . .

"The miner has left as much as 5 million tons of metallurgical coal production -- or about half of its full-year production target -- unpriced for the remainder of 2010. Even with met coal spot prices reaching $250 per ton -- $50 more than the April 1 quarterly benchmark price -- Peabody has left virtually all of its 2011 met coal production similarly exposed.

At least 45% of Peabody's thermal coal production in Australia remains unpriced, with a further 9 million to 10 million tons unpriced for 2011.

Peering further afield, into 2012, we find Peabody's confidence in these long-term pricing trends extending to the recovering U.S. coal market: "Peabody retains the largest unpriced position in the industry for 2012 with 120 to 130 million tons available for pricing in the United States, along with 23 to 25 million tons in Australia," the company said."

Chris Barker

[Hank Wernicki]

THIS MARKET IS GOING TO TANK WITHIN THE WEEK
QUOTE ME ON THAT ............. GO SHORT

Hank