Posts Tagged wind
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My first reaction was “Wow! Did I just read that correctly?!”
It was one of those “ah-ha moments” when a seemingly mundane statement leapt out of the page and whacked me on the forehead. This time the catalyst was a twitter reply from Chris Pragman (@ChrisPragman) who describes himself as an “Avid Podcast listener, Engineer, Nuclear Power, Fire Protection, and beer geek with a long commute!”
You see, I had posted a tweet earlier in the day about the cost to taxpayers of some “green energy” jobs. There’s a new wind farm in Oregon called Shepherds Flat that received federal cash grants totaling $490 million under the guise of job creation. For that grand sum the Shepherds Flat project will create 35 new jobs. The math is easy; $14 million per “green energy” job. Our tax dollars at work!
This tidbit about Shepherds Flat was part of a larger report by the Energy Tribune that among other things compared the relative size of US government subsidies to various energy industries. The report by Robert Bryce calculated subsidy dollars per unit energy produced and concluded the renewable energy industry receives 6.5 times more federal government subsidies than the nuclear industry, and 12 times more than the oil and gas industry. That fact really didn’t surprise me considering the billions of dollars in grants, production tax credits, and favorable depreciation rules the government lavishes upon anything branded with the “renewable” label. Then Chris asked a great question, “What do they consider nuclear subsidies?”
When I dug into that question I learned the Congressional Budget Office is tasked with tracking the amount the government spends subsidizing various industries, and they publish their findings periodically. There it was on page 3: $900 million in “subsidies” for the “favorable tax treatment of nuclear decommissioning funds.” Hmmm. What could that be?
You see, every nuclear plant owner is required by federal law to set aside funds to ensure there’ll be enough money to pay for decommissioning the plant when the time comes. Typically plant operators add to the fund each year and over time the fund grows until it’s used. The NRC monitors each fund and will require plant owners to make additional payments if they think they’re behind. These funds are essentially forced savings accounts that add to each nuclear plants annual operating expenses.
So what’s the “favorable tax treatment?” It turns out Title 26 of the United States Internal Revenue Code requires interest or other investment earnings of nuclear plant decommissioning funds to be taxed at “only” 20%. Maybe I’m alone in this, but being required by law to set up a fund, then being taxed on that fund’s growth hardly fits the definition of a “subsidy!” Other sources of energy are not required to set up such funds – they carry the potential future costs of dismantling equipment as liabilities on their balance sheets. In the case of nuclear plants they’re forced to set aside capitol in government mandated and monitored funds, then the government takes 20% of the fund’s earnings.
Anyway, in 2009 the CBO calculated this “favorable tax treatment” to be worth $900 million, and they called that a “subsidy.” That’s quite a different kind of subsidy from the cash grants, tax credits, and accelerated depreciation enjoyed by the renewable energy industry. Personally, I have a tough time viewing this as a subsidy at all.
Chris, thanks for asking the question! I learned something new today, and maybe some of you out there did too.
Happy Birthday to This Week in Nuclear!
On Dec 27 This Week in Nuclear will turn seven years old. I would like to express my heartfelt “thanks” to all of you who have supported and continue to support the blog and podcast!
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%. According to the Canada Free Press:
For each megawatt of wind energy installed, 4.27 jobs were lost, and for each megawatt of solar energy installed, 12.7 jobs were lost.
Eventually it became clear the Spanish government would have to act to curtail the exploding debt and rescue the utilities from bankruptcy. Earlier this year they stopped granting requests for new feed-in tariffs. Beginning in January 2013 they’re implementing a new 6% flat tax on all electricity production. In addition, they’ve singled out nuclear energy for “special” taxes they are calling a “nuclear waste generation and storage tax.”
Let’s get this straight: Spain’s national energy policies enriched wind and solar energy investors while bankrupting utilities and contributing to massive job losses. Now they’re calling on nuclear energy operators, their largest source of domestic energy to foot the bill! Not only is this course of action irrational and unfair, it punishes the domestic energy production and job creation they desperately need and it perpetuates favoritism for expensive renewables that created the problem in the first place.
The first victim has already fallen to the anti-nuclear tax; the Santa María de Garoña nuclear plant is being forced out of business. Garoña is a 446 MW BWR that began commercial operation in 1971. The plant’s owner says the new 153 million euro tax that will go into effect in January is more than ten times the plant’s annual profit. They have no choice but to shut the plant down for the last time on Sunday, December 23. Hundreds of jobs will be lost at the plant and in surrounding communities. Since Garoña provides about 1.4% of Spain’s electricity, utilities will be forced to import more coal and natural gas to make up for lost base load generation.
With lost jobs, lost revenues, and rising energy imports Spain’s energy death spiral continues.
Mis oraciones por mis amigos de Garoña. Buena suerte en el Año Nuevo, y le deseo todo lo major.
The US Department of Energy issued a press release today announcing a new $102 Million loan guarantee for a 50.6 MW wind farm near Roxbury, Maine and an 8 mile transmission line to connect it to the grid. Before we join hands in carbon-free jubilation let’s do the math:
$102 Million for 50.6 MW that will operate (best case) at 30% capacity = $6.72 million per megawatt (MW) of delivered electricity
Duke Energy is one of the largest power producers in the Western Hemisphere. They produce 35,000 MW of electricity in the USA, plus 4,000 in Latin America. They have virtually every type of power plant: nuclear, coal, gas, hydro, wind, and solar. They also run natural gas distribution systems in two states.
Duke knows energy, and Jim Rogers, their CEO, knows Duke. When Jim Rogers speaks about energy people listen. Last week Mr. Rogers was talking energy and jobs. Jim says Duke’s experience has shown that nuclear energy provides more jobs and higher paying jobs than wind or solar power plants.
“In an operation of a nuclear plant, there [are] .64 jobs per megawatt. The wind business–and we have a very large wind business – is .3 jobs per megawatt. In the solar business – and we’re installing solar panels – it’s about .1. But the difference in the jobs is quite different, because if you’re wiping off a solar panel, it’s sort of a minimum wage type of job, [with] much higher compensation for nuclear engineers and nuclear operators. If our goal is to rebuild the middle class, nuclear plays a key role there, particularly if coal is out of the equation.”
Mr. Roger’s comments made me wonder how many jobs might be created if we were to build new power plants of each type to meet our energy demands. I started with the most recent Energy Outlook provided by the US Government at the Energy Information Administration web site. This report states that 259 GW of new plants will be needed by 2030. The number includes 30 GW to replace aging plants and the rest is for modest energy demand growth.
Multiplying that 259,000 MW times the Duke estimates for the number of people per MW, we get the result (rounded to the nearest 1000):
- New Nuclear: 166,000 jobs
- New Wind: 78,000 jobs
- New Solar: 26,000 jobs
These numbers ignore the 2,000 to 3,000 jobs created building each new nuclear plant during the four year construction process. Building wind and soar would also provide temporary construction jobs. I also did not adjust for the lower capacity factors associated with wind and solar generation. We’ll assume smart grid technologies will enable improvements in wind and solar energy capacity and existing reserve capacity will back up wind and solar. After all, these are the kinds of assumptions that wind and solar proponents make all the time.
In Episode 60 of “This Week in Nuclear” I discussed how every dollar spent building new nuclear plants provides far more energy than either wind or solar. Now we’re discovering that nuclear plants also produce more jobs per MW. Combining these two findings we gain an important insight: every dollar spent on new nuclear plants provides not only more energy, but also more jobs.
It’s not often that we find one solution for two very tough problems, but that’s exactly what we have done: Investing in nuclear energy can provide much needed high paying jobs that can’t be sent overseas, in addition to reliable, clean energy to power our economy.
Renewable energy supporters were spreading the word today that this past Sunday wind energy in Spain produced 53% of the country’s electrical demand.
The Spanish wind power industry broke a record on Sunday morning, when turbines nationwide met 53% of the nation’s demand for electricity with production of around 10,170 megawatts (MW), according to La Asociacion Empresarial Eolica (AEE), the Spanish wind industry alliance.
This was certainly an achievement, but before we get too excited we need to read carefully and consider the situation. This was an intermittent peak in wind energy output that happened to achieve 53% of the electricity demand when the total demand was very low. This occurred during a 5 ½ hour window in the early morning hours of a Sunday morning in November. Everyone was asleep, there virtually no lighting load, no cooking, few factories were running, no air conditioning, and probably very little heat. As a result, total demand was relatively low.
Before we declare renewables a resounding success, take a look at a more telling statistic: the 11.5% overall contribution of wind to Spain’s grid during all of 2008. That means that day in and day out 88.5% of Spain’s electricity came from nuclear, gas, oil, and coal. Of that, the only carbon-free source was nuclear.
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 leading conservation organization working around the world to protect ecologically important lands and waters for nature and people
The study compares the impact to natural habitats in the United States of various types of new energy development. They refer to this as the “land use intensity” of energy, and it is measured in energy produced for a given land area. Specifically, they estimated the amount of land that will be needed for the USA to meet energy demands by the year 2030 for various energy sources. The group is concerned that the build out of new energy sources to meet growing demand and combat climate change could cause what they refer to as “energy sprawl” with detrimental impact to natural habitats. It turns out, there is a lot to worry about!
The results? It takes on average 72 square kilometers of land to provide one megawatt of energy for one year when wind turbines are used. Solar energy is better at 15 to 37 square kilometers, depending on the technology used. Nuclear energy has the lowest impact on land use of ANY energy source. In fact, nuclear energy has about one sixth the impact of solar thermal generation, and one thirtieth the impact of wind generation.
It takes just 2.4 square KM, or about one square mile to provide one megawatt of electricity for one year when that energy is derived from nuclear energy. This is a great example of how the incredible energy density of nuclear energy provides benefits to society.