Irrational Pro-Renewable Policies, Nuclear Energy Tax Hikes Harm Spain’s Economic Recovery
Dec19

Irrational Pro-Renewable Policies, Nuclear Energy Tax Hikes Harm Spain’s Economic Recovery

Spain’s electrical supply industry is caught in a decade long death spiral of failed energy policy, over-reliance on imported fuels, and massive debt. Their new taxes on nuclear energy, an attempt to reduce utility debt, are likely to worsen their economy. Spain imports fuel for about 51 % of their electricity production in the form of coal and natural gas. Payments for these imported commodities contribute to a debilitating trade imbalance. Nuclear energy makes up the lion’s share (47%) of Spain’s domestic energy production. Their eight nuclear energy facilities add tens of thousands of jobs and billions of euros per year to the national economy while reducing the need for imported coal or gas.  At the same time Spain’s nuclear plants provide reliable, predictable energy without greenhouse gas emissions. The amount of renewable energy generated in Spain has increased considerably over the last several years.  In fact, in 2012 wind energy production exceeded nuclear energy production for brief periods when demand was low, some nuclear plants were out of service, and wind conditions were nearly optimal.  Unfortunately, Spain’s methods of encouraging investment in renewables have contributed to their current financial crises. The Spanish electricity industry is carrying $32 billion of debt, putting serious strain on an already faltering economy. Spain began deregulating their electricity supply system in the late 1990’s.  Their approach was eerily similar to the failed California experiment; they removed price controls to allow power generators to compete among themselves, but they limited rates paid by customers. As wholesale energy prices rose utilities were unable to recover the higher costs through higher rates to customers.  The result was predictable: electric utilities began loosing money on a grand scale.  Since 2005 annual “energy deficits” have been in the billions of euros per year.  With slight-of-hand economics, the Spanish government allowed utilities to “bank” their annual deficits against future earnings.  Unfortunately those future earnings never materialized and deficits ballooned. A the same time Spain (like California) began a heavily subsidized renewable energy program that included “feed-in tariffs” which guaranteed wind and solar generators above market prices for all of the energy they could produce.  Consequently utilities were forced to buy wind and solar energy at inflated rates, but were not allowed to recover the costs because of those same price controls.  Solar and wind energy investors raked in billions of euros per year while the utility deficit grew even faster.  By some accounts electric utility debt in Spain now stands at $32 billion. These out-of-whack energy policies cost Spanish workers dearly; for every renewable energy job created more than five existing jobs were lost and unemployment soared to over 20%....

Read More

Wind Tax Windfalls, Nuclear Tax Burdens

This Week in Nuclear Episode #78 – MP3 File In this episode of This Week in Nuclear I interview Joseph Somsel, the author of “How Taxes Pervert Our Energy Choices”.  Our discussion covered a wide range of topics including: How favorably short depreciation schedules for wind have created a “gold mine” for investors, virtually independent of how much electricity the wind turbines produce. How nuclear investors would benefit if new nuclear plants received the same treatment as new wind turbines. How tax law have created hidden massive subsidies for wind energy, but added tax burdens for nuclear. A creative option for funding the industrial infrastructure needed for nuclear fuel cycling. Comparisons of the lifetime energy provided by similar investments in wind and nuclear. Who pays for new transmission lines to support new wind turbines and new nuclear plants. What do nuclear loan guarantees actually guarantee? Be sure to read some of Mr. Somsel’s other works.  Here are a couple of places to start: The American Thinker Energy Pulse John...

Read More

US Taxpayers Paying $Millions for Renewable Energy Overseas (Fast Fission Podcast #9)

Get the MP3 Here It’s 9:00 at night and I’m on an Amtrak train heading north out of Washington DC where I attended an awe inspiring inaugural Thorium Energy Alliance Conference.  What a great event!  I learned a lot about thorium as an energy source and about the various kinds of reactors that might take advantage of thorium’s unique properties: its amazing energy density, proliferation resistance, safety, and suitability for low cost reactors that could be assembly line produced and deployed around the world.   So I’m sitting on the train scanning the news coming across Twitter when a story from the NY Times almost made me scream out loud!  I am NOT KIDDING!  If I was at home not in a train car full of sleeping passengers I’d be screaming at my Blackberry in frustration! Here’s the deal: the United Nations recently formed a new agency called the International Renewable Energy Agency whose goal is to encourage deployment of renewable energy around the world, and foster sharing of technology between developed and undeveloped nations.  Essentially, it is an international trade association promoting mostly wind and solar energy.  So you might say, “No big deal, let them do their thing!” right?  Wrong!  The United States signed on to the group in July and, under UN rules, is now required to foot the bill for 22% of the new agency’s operating expenses!  That means that the US taxpayers are on the hook to pay $4 million per year now, and the annual amount will grow to $11 million per year within the next few years!   Let’s get this straight – we’re paying between $4 and $11 million the worst economic recession in decades to fund deploying unreliable intermittent energy sources that can’t operate without ongoing massive government subsidies.    Developing nations don’t need high cost intermittent energy; they are desperate for reliable base load energy.  So OK, $11 million is not that much money in the grand scheme of things, but in my mind it is throwing money down a rat hole.  If these nations can’t afford to buy the wind turbines, how are they ever going to afford to subsidize their operation and maintain them?  Either we’ll continue to subsidize them for years to come, or the turbines will go idle.  The other thing that really got me going was a statement by the new agency’s boss, Helene Pelosse, a French official. When asked if IRENA, as the new agency is known, would hold a pro-nuclear policy she replied, “IRENA will not deal with nuclear energy, simply because it is not renewable. Nuclear and renewable energy have nothing to do with each other.”  Ms. Pelosse obviously does not keep up with the times!  If she...

Read More