Offshore wind: a case study in how bad decisions can get made
12/04/17 Filed in: Energy | Political System
READER FEEDBACK AT END.
If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts he shall end in certainties. – Francis Bacon, circa 1600
A recent column argued that people often entertain and support inherently implausible conclusions about the issues of the day. Why? They haven’t learned how the world actually works and the pitfalls in failing to think things through. 15 things far too many Americans are foolishly taking for granted, John Hawkins, townhall.com, 11/25/17.
Many Americans don’t know why this country is so successful, don’t understand the long-term ramifications of the things they advocate politically and don’t get how lucky we are.
In general, Hawkins makes a good case that one should not reach conclusions about controversial issues without considering both sides of the argument. Here are two examples from his inventory of dubious propositions (typically accepted by default vs. being affirmatively stated):
6. Social Security and Medicare will always be available for the enormous number of Americans that depend on [them] even though we have no money set aside for either program and we have an unsustainable debt that we are adding to every year.
12. We can abandon the pure capitalism that made our country so rich, pile regulation on top of regulation and exorbitantly tax the most productive members of society without it slowing down the economic growth, jobs and opportunity for everyone.
Another column pursues a related line of inquiry. Why does the public heed analysts whose prior conclusions have been way off – e.g., on the rate of global warming - versus analysts with better track records? Choosing political bias over economic reality, [economist] Richard Rahn, Washington Times, 11/27/17.
All of the major climate models forecast a much more rapid rate of global warming than has actually occurred, yet rather than admit error, many forecasters and their media allies have doubled down instead of lauding those who were closer to the mark.
SAFE has previously suggested that Americans (especially younger ones) aren’t demanding actions needed to preserve our economy and society over the long haul. As a result, “this country is in a mess and there is no easy way to get out of it.”
What ever happened to the spirit of 1776, when our founders pledged their lives, their fortunes and their sacred honor to a cause that was far from a sure thing? Remember the past to save the future, 7/4/11.
Perhaps young people have had things too easy thus far, making it hard for them to picture developments that could leave their futures in the dustbin. As Dan Kerrick (SAFE’s youngest director) puts it, “I think the eventual financial collapse is the only thing that will wake anyone up.”
Now let’s turn to a “renewable energy” proposal that is currently under study in Delaware. This example neatly illustrates how costly mistakes can be made based on wishful thinking and superficial analysis.
A. Issue – Following the approach used in the John Hawkins column, here is a statement about generating electric power from offshore wind turbines that may sound logical but should not be taken for granted.
Offshore wind power must be a good bet as there is an endless supply of free energy to generate it and no pollutants are emitted from the operation.
This claim omits several points about offshore wind power, including: Heavy capital investment in comparison to conventional power plants, e.g., combined cycle natural gas - large environmental footprint (seabird kills, etc.) – power produced is intermittent so it doesn’t add to grid capacity and must be backed up by reliable power sources (the same goes for other “renewable energy” projects, i.e., onshore wind or solar power).
Based on levelized cost data from a 2017 report of the US Energy Information Administration, we previously concluded that various energy sources for new electric power generation facilities compare as follows from a cost standpoint. Reliable versus intermittent energy sources, 11/6/17.
The data suggest that combined cycle natural gas would be the best bet for adding highly reliable (85%+) generating capacity. Coal has basically been knocked out of contention by (a) low natural gas prices resulting from the fracking boom, plus (b) government regulations requiring CO2 sequestration for new coal power plants. New nuclear plants come closer to being cost competitive, but they take years to build and are subject to many uncertainties re future regulatory requirements.
Offshore wind power is prohibitively expensive, and solar power is pricey (although considerably less so if the currently available 30% investment tax credit is taken into account). Onshore wind is competitive with combined cycle natural gas (even before tax credits), but it provides intermittent output (lower capacity factor) and would therefore need to be backed up by more reliable power sources.
There are also substantial reasons to question the leading argument for wind or solar power, namely that a buildup of atmospheric CO2 (current level is about .04%) as a result of burning fossil fuels could cause catastrophic global warming. More on this later.
And even if the manmade global warming theory was deemed valid, offshore wind power would still seem like a nonstarter because onshore wind or solar power could provide the same purported environmental benefits at lower cost.
DE Governor John Carney nevertheless appointed a high level working group (WG) to study the potential benefits of participating in offshore wind power projects, with no known skeptics about offshore wind power in the mix. What’s more, the WG was given a tight time deadline and instructions that encouraged a focus on “how” rather than “whether” Delaware should do this. Assessing potential for offshore wind power projects, 10/9/17.
No later than December 15, 2017, the Working Group shall submit a report to the Governor that includes at least the following: (a) Report on the relevant laws, regulations, benefits, costs, barriers and opportunities for developing offshore wind to serve Delaware; (b) Recommendations for shorter- and longer-term strategies for procuring offshore wind power to serve Delaware; (c) Recommendations for plans to develop job opportunities for Delaware in the offshore wind industry; and (d) A draft of any necessary implementing legislation including possible amendments to Delaware’s Renewable Energy Portfolio Standards Act.
After the first WG meeting on October 6, there seemed to be two logical courses of action. One was to recommend against offshore wind power on grounds that the cost would be excessive and there would be no unique environmental benefits, i.e., onshore wind/solar power could arguably “save the planet” at lower cost. The second was to request more time to complete the study given the complexity of the issues involved (see below) and a lack of certainty about the right answers. Ibid.
High cost of offshore wind power – feasibility of passing the extra cost on to ratepayers and/or taxpayers – avoiding mistakes that led to the Bloom Energy debacle – need to ensure continued reliability of the electric power grid – realism of claims about the “green jobs” that offshore wind would create and the likelihood that there would be offsetting losses of existing jobs.
B. Assessment – If any WG members noted SAFE’s publicly posted suggestions about the path forward, they didn’t show it. The group held a series of additional meetings (Oct. 20, Nov. 1, Nov. 15, Nov. 29). A final meeting is scheduled for Dec. 11 at which a proposed report to the governor will presumably be approved.
So far, to our knowledge, none of the WG members have (a) seriously addressed the case against offshore wind power, e.g., excessive cost coupled with no unique environmental benefits, or (b) considered the desirability of a don’t do it recommendation.
At the Nov. 15 meeting, for example, an hour was allotted (per the agenda) to discussing (a) “policy options for the Working Group to consider,” and (b) “report structure and outline.” The actual discussion, however, focused primarily on a procedural issue. Was it proper to conduct public comment sessions (scheduled for Nov. 27 and Dec. 5) before the WG report was drafted, thereby giving attendees nothing concrete to which they could react? Meeting of offshore wind working group, 11/15/17.
There was considerable discussion of how the public review sessions have been scheduled before the working group report will be available for review. This reflects the tight timetable for the working group which must submit its report to the governor by December 15. The apparent conclusion was that there will be further public review sessions after the working group report is prepared, i.e., the December 15 report will not be the working group’s final word on the subject.
At the end of the November 15 meeting, there was an opportunity for public comments (limited to three minutes per speaker). A self-taught expert on energy policy used his time to recap the disadvantages of offshore wind power.
John Nichols rattled off a series of arguments against an offshore wind project. Costly – would not add to capacity – would lock Delaware taxpayers or ratepayers into wind power for 20+ years during which time new technologies might become available that would be clearly more attractive from an economic/environmental standpoint – more jobs would be lost due to higher average power costs than would be added by wind power – many seabirds would perish.
Such inputs are a matter of public record, but WG members have no obligation (or apparent inclination) to pay attention. Unless and until the media and/or general public join the chorus, it’s unclear what the opportunity for public comments accomplishes.
Thus, John Nichols and David Stevenson of Caesar Rodney Institute slammed offshore wind power (for five minutes each) at the first WG meeting. Assessing potential for offshore wind power projects, 10/9/17. The News Journal didn’t report their comments, however, and the meeting minute summaries were so terse as to be meaningless. Oct. 6 meeting (download minutes).
•John Nichols spoke in opposition to buying overpriced renewable energy, and provided written comments.
•David Stevenson of the Caesar Rodney Institute offered comments on the cost and questioned the environmental benefit of offshore wind, and provided written comments.
• Kris Oleth of Ecology and Environment, Inc. spoke, saying she was a former Bluewater Wind employee, and said she would be happy to provide information on offshore wind in New York to the Working Group.
C. Public involvement – Would inputs from the public comment sessions influence the WG’s deliberations in a constructive way? Our observations at the Nov. 27 session in Odessa suggest otherwise, and here’s why. Offshore wind study is muddling along, 11/28/17.
The basic purpose of the meeting, according to the DNREC hearing officer, was to obtain public comments for the record on participation by Delaware in such offshore wind projects as might be proposed by the working group. Any attendee could address the meeting, but comments were to be limited to the subject matter at hand and held to a maximum of three minutes. Moreover, all concerned should be respectful of others with whom they might happen to disagree.
One of the working group members (Tom Noyes of DNREC) provided an overview of the topic, starting with the governor’s executive order and two offshore wind projects that the state of Maryland has decided to support, after which the floor was opened for public comments.
About 50 people were present, of whom 13 asked to speak. Their respective comments were taken down by a stenographer, and a transcript will be published in due course. Meanwhile, here’s our take on what was said.
Eight of the speakers supported offshore wind, three spoke in opposition, and one (a wind power supporter) slammed the meeting design because there was no opportunity for informative interaction.
#Supporters of offshore wind lauded alleged environmental benefits, health benefits, and the “green jobs” that could be created. Other countries are getting ahead of us, science tells us we have to do this, bird kills can be minimized by siting facilities in an optimum fashion, etc.
As for the impact of offshore wind on electric power costs, several different arguments were offered. Ancillary benefits (14.3¢ per KWH, one speaker said, albeit without citing a source) outweigh any cost disadvantage. The current differential will disappear in a few years as the cost of natural gas rises while the offshore wind technology keeps improving. And by the way, offshore wind power isn’t that much more expensive than conventional power right now.
#Three naysayers (Geoffrey Pohanka from Bethany Beach, John Nichols of Middletown, and a representative of Calpine) painted a very different picture.
The cost differential was substantial and would not magically disappear, the alleged environmental and health benefits of offshore wind power were illusory, and there was no excuse for using government mandates or subsidies to put such systems into use. By the way, why were large industrial power users to be exempted from costs of the arrangements leaving other consumers to bear the burden?
Mr. Pohanka added that visitors to the Delaware beach area wouldn’t relish the sight of offshore wind turbines. Although it was planned to site them some 20 miles off shore, these facilities would be higher than the Washington Monument and clearly visible from shore (copies of a photo rendering were circulated which showed what this would purportedly look like.)
OK, doesn’t seem to be much common ground, how should one choose who to believe?
#One approach might be “majority rules,” resulting in a solid (8-3) plurality for offshore wind power. This assumes people are well informed about the subject matter before speaking, however, which wasn’t obviously the case. It also ignores the possibility of a “silent majority” (3/4 of the attendees didn’t speak) that would favor whatever decision would minimize their monthly electric bills.
Note that the pro-wind speakers cited several arguments of the “everyone knows” variety, notably the manmade global warming theory (MMGWT), and focused primarily on lofty intentions versus likely results. That’s exactly the kind of mindset that John Hawkins advised against in his column about things Americans should not take for granted.
#Another approach might be to consider the qualifications of the speakers and the credibility of the points they made. The three naysayers had business backgrounds, and they were notably more specific about costs, reliability, and other details than the other speakers. Accordingly, their views could be seen as carrying the day.
Paradoxically, the seemingly well-informed naysayers could be accused of ignoring the true “experts.” Consider how John Nichols has argued, for example, that the MMGWT should be deemed a subject for discussion versus a well-known fact.
But without launching into an extended discussion, there are several indications that the MMGWT may not be quite as clear-cut as, say, the laws of gravity.
The claim of an overwhelming scientific consensus in favor of the MMGWT is basically a fabrication, and supporters have gone overboard in attempting to silence critics. Global warming skeptics are not enemies of science, 5/2/16.
Proponents of the MMGWT seem allergic to defending their position in an open forum. The march for science, 4/7/17.
Past predictions of calamitous consequences in the absence of immediate action to stop global warming have repeatedly failed to come true. After 30 years, alarmists are still predicting a global warming “apocalypse,” Michael Bastasch, freedomoutpost.com, 11/26/17.
#Finally, following the reasoning of the meeting design critic, one might dismiss the results because the speakers weren’t allowed enough time to make their case and respond to questions or objections.
After the public comments portion of the meeting, representatives of US Wind and Deepwater Wind spoke about the two offshore wind power projects that Maryland has decided to support. (These presentations had been scheduled before the public comments, but the presenters arrived late so the order was reversed.)
Tom Noyes underscored that the presentations were intended to be informative rather than a sales pitch, and no one should infer that the WG had decided to recommend Delaware’s participation in offshore wind power let alone support any particular project or firm. Nevertheless, these speakers got a better opportunity to be heard than the critics of offshore wind power who were present.
D. Path forward – Time will tell what the WG concludes about offshore wind power, but we have a feeling that some sort of Delaware participation in this activity will be recommended. If so, there will almost surely be extra costs involved, to be borne in some manner by Delaware electric power consumers and/or taxpayers.
This would be on top of the Bloom Energy fiasco, which is already costing Delmarva Power ratepayers some $30 million per year for no good purpose. Bloom Energy repays $1.5 million to Delaware after failing to hit job goals, Scott Goss, Delaware.com, 10/25/17.
We don’t favor such an outcome and plan to comment accordingly. What do you readers think?
#I think this is an ego trip for the governor and the members of the working group. They will appear to be doing good for the environment (virtue signaling) if the decision is to proceed with an offshore wind project. – SAFE director