Below are a few letters received at EnergyBiz Insider on topics that appeared in the past few weeks. They capture the essence of how many readers say they feel.
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Clouds Lifting for Solar Energy - April 14, 2010
I read your article on solar energy with great interest. It is important to note that while Europe either has or will meet the 20 percent renewable by 2020, they are paying $0.40/kw-hr for their power. Most Americans are paying in the neighborhood of $0.15/kw-hr today. We in America have to come to the realization that if we want the same amount of renewable power we are going to have to pay the same price.
The problem is not that the cost of installation of renewable is so much more, although that is a factor, the real issue is capacity factor. The average coal plant has a capacity factor (output/installed capacity) of 90 percent or more and most nuclear plants around 99 percent, depending on the dispatch. A good solar plant in the Mojave Desert may be able to have a capacity factor of up to 25 percent. The same system in upstate New York will be lucky to get a 15 percent capacity factor. Wind farms in the best locations are lucky to get a capacity factor of 40 percent. So when I see the numbers like 17 gigawatts, I am assuming it is installed capacity and the actual output is more like 3 gigawatts. This means the cost can't be based on the installed capacity, as is the case with coal and nuclear, but rather on final output which is up to 80 percent less than installed capacity. I am assuming that the banks already know this and it is one reason they are so reluctant to make loans to the renewable energy industry.
Tell the American people that in order to meet the 20 percent by 2020 their electric bills will have to more than double and see what the reaction would be.
Philip T. Flowers, P. E.
TMPA
Performance Engineer
I think that you are under a misconception.
Solar Power Partners, a California firm, has been doing medium scale solar projects for several years, which are not residential projects. Two megawatts is the size of a recent project which has been completed at Fresno Airport. The projects are financed by investors and the end user gets a guaranteed rate for 20 years which is lower than the grid. The company installs the infrastructure at no charge to the end user and they make a profit by selling the electricity to the end user. Rates are stable and there is no risk on the part of the end user. They use conventional PV cells, which have been constantly improving in efficiency and the costs are decreasing. It is a safe solution which doesn't require huge investment or transmission lines.
Please let your readers know about this.
Steven Schwartz
Conciliatory Approach to Change - April 16, 2010
Good article on the balance needed for climate change legislation -- right on tract with the cooperatives national position.
I haven't studied the climate change issues in enough detail to formulate my own opinion, but from experience I'm assuming the truth is somewhere in the middle of the two sides of the argument which in turn supports your position. The climate change debate takes me back to one of my college courses -- the history of science and technology -- in which we learned that many important discoveries were "right" but for the wrong reasons, i.e. Ben Franklin recognized the power of electricity but thought that it was some type of fluid. Perhaps the theory of global warming may be wrong, but if we began to develop more efficient and sustainable energy resources as a result of climate change concerns -- perhaps we have come up with the right answer, albeit for the wrong reason. Another thing I read that one of the Greek philosophers (can't remember which one and Google didn't help) said about his acceptance of Christianity makes me think about this debate -- he said, "If I believe and am wrong I have lost nothing, but if I don't believe and am wrong I have lost everything."
Greg White
President & CEO
Northern Neck Electric Cooperative
The Natural Gas Card - April 19, 2010
It remains to be seen how and if the apparent move to open up additional areas for natural gas will actually occur. But I would have to take issue with your statement that there were "calls to drill at anytime and at anyplace." No serious proponents have ever made such a claim. The absurdity of the Left's continued effort to keep the United States from utilizing its own energy resources, be they gas or oil, at the expense of filling the pockets of the Middle East countries continues to be "crazy policy".
Bruce Mitchell
It is unlikely increased domestic production is going to put any significant downward pressure on the prices Americans pay for oil and refined products. New deepwater fields don't have the volumes or the sustainable production capacity to make a lot of difference compared with worldwide demand, which is what sets the price. Moreover, deepwater drilling is expensive and risky, so oil prices will have to remain high or even trend higher before the new offshore fields can be economically developed. It's also probably not going to have much influence on the price of natural gas so long as shale gas can be extracted economically and without polluting drinking water supplies.
What both could do is reduce pressure on the country's balance of payments until either domestic production of "unconventional" oil plays like shale oil become economically viable, or renewable substitutes become available at competitive prices. The public needs to understand that borrowing money from the likes of China to import oil is not sustainable, and that these kinds of money flows are likely to threaten our prosperity and our children's prosperity unless we sharply curtail them, and soon. That's why we should be developing renewable substitutes for petroleum, not the prospect of markedly lower energy prices.
Jack Ellis
Resero Consulting
Earning Executive Pay - April 21, 2010
And we all wonder why the cost of energy is so high, not to mention the high cost of R&D. Perhaps cutting their pay by say, 50 percent and cutting out all of the incentives until the cost of energy is relative to the unemployment situation in terms of percentages. Now that would help the so-called bottom line.
Sorry, I have no compassion for the big wigs and their "more than happy to accept a pay increase" attitude in spite of wage freezes being the norm these days. I know, lucky to have a job should be enough. That ball should swing both ways as well as from top to bottom, starting at the top.
Matt Kangas
I earned a PhD in Mechanical Engineering from Purdue, and did not make $7 million cumulative in my entire working career. This is in spite of the fact that my inventions and designs literally earned billions for my employers. Instead of rewarding contributors, I am sure the companies chose to reward one of my well-deserving managers with a nice bonus for my developments.
My heart and crying towel goes out to the $7 million men who lost an entire 0.9 percent compensation for last year. Really now, the U.S. has been tending toward a rich get richer and poor get poorer compensation system for too long. Perhaps some feel that medieval feudalism never really had a fair chance to operate and would like to try that system again.
I feel the executive pay should be capped at a some fair ratio to the average company pay. Realistically, what does anyone ever do with more than $1 million per year salary? That money belongs to the stockholders.
Bruce Gerhold, PhD, P.E.
Coal's Tarnished Image - April 23, 2010
I am a bit of a cynic, so I have the feeling that the whole carbon credits and proposed new regulations on carbon emissions is the radical agenda way to force the costs of fossil fuel power above the costs of wind and solar. As the shares of generating capacity using those technologies increases, a lot of fossil fuel plants will be abandoned. When that happens, the reliability of the power grid will likely decrease -- the wind does not always blow hard enough and sometimes blows too hard for wind turbines and the sun does not always shine brightly. The results will be some brownouts.
Besides the obvious spent fuel issues associated with nuclear power, one thing that appears to be consistently overlooked is that nuclear plants put a lot of waste heat into the environment for a given unit of output. Then there is the capital cost issue. All that cost will eventually roll down to the everyday citizen-taxpayer.
We need to keep our heads. Prior to the recession, were not an increasing number of people opting to select green-only power from their providers and pay a little bit more for it? If we get our prosperity back, I think that trend would continue as people have a choice where to spend. CO2 cap and trade will cripple the US economy.
Byron Wooldridge
Massey Energy has little regard for its own employees and appears to have even less regard for the "collateral" damage of coal mining -- polluted air and water, huge mounds of coal ash, destroyed communities. Some 500 mountains and 2,000 linear miles of streams have been utterly destroyed by mountaintop removal mining as well.
Why are we leaving this horrible mess for our children to clean up? Clearly the "externalities" of coal are getting larger by the day.
Nancy LaPlaca
Energy Markets and Banking Reforms - April 26, 2010
Perhaps this might provide support for reenacting the Glass-Steagall Act to allow for the separation of "investment" banks to carry on activities in more speculative markets, while allowing the general "commercial" sector to be outside such risky endeavors?
Michael R. Keene
Key Account Executive
AmerenCILCO
Unfortunately, we will never know for sure. However, if we the history of bank bailouts and such, we see that before each major crisis, a strong regulatory position has been consistently weakened. The repeal of Glass-Steagall (along with the weakening process prior) certainly opened up the financial industry to a rampant source of untapped rubes upon which to prey until they needed a scapegoat (ACORN, toxic debt, low-income mortgages, etc.) in order to offload all those known to be bad pieces of paper. Remember, they were the ones NOT doing their own due diligence, plying the trade of caveat emptor without understanding or believing in it. Once again, our beloved government has placed the needs/wants of the welfare state of the banking industry above the needs of the People.
Glass-Steagall was an effective barrier between the two, but as usual, big money wins out over the Constitutional mandate for Congress to regulate.
If banks want to speculate, I have no objection. They must however be required to clearly define whether they are an investment bank or in institutional bank. They should never be allowed to sell the same toxic debt they created and also claim to be a stable and reliable institution.
Russ Dittmer
Price Spikes and Regulating Hedge Funds - April 28, 2010
Great article. I have been saying this for years, have even talked to several regulators and congressmen about it. I am glad that the CFTC is doing something about it. I would rather it come from Congress since I don't like to see regulators essentially creating new laws without Congressional blessing. Constitutionally, the bureaucrat approach that is less than ideal.
However, I am glad it is getting done and agree that it is indeed a fine line that has to be drawn -- free markets vs. true markets. With too much freedom, history shows us repeatedly, that some will come in and distort the market for their own benefit. Free markets only work when we have true markets, not distorted ones. Hence, with respect to NYMEX Gas, I have long advocated limited positions for anyone that is not a physical consumer or producer or does not represent one. Let the commercial guys trade 10 percent of the market unless they represent physical players (and then they could participate with those physical volumes as well). That would both limit the manipulation, provide some increased liquidity and give them reasons to find and represent the physical consumers, thus increasing service to those who really have a stake in the game.
Mike Brasovan
President
THG Energy Solutions, LLC
You failed to state a key point when you called hedge funds "unregulated mutual funds". That key point being that anyone can participate in the Mutual Fund arena, including the family next door. A Mutual Fund spreads the risk out by containing several, or many different securities, and is participated in by thousands of people, and is publicly traded. A Hedge Fund is "Private Placement", or "Private Offering". They are not open or available to the public; i.e.: they are not publicly traded. Only "Qualified Institutional Investors" may participate in private placement offerings. Those investors must meet certain criteria established by the SEC. And it's usually one instrument, or security being offered, unless it's a "Fund of Funds".
That was a key point that was overlooked in the April 27th laughable senate hearings with the four men from Goldman Sachs. The Senators, especially the Chairman, showed how completely ignorant they are about hedge funds, even going so far as to blame Goldman's involvement with CDOs as being part of the reason for the economic collapse. Taking a position (long or short) and placing puts and calls on any type of instrument, whether that instrument is based on questionable mortgages or not, didn't cause the collapse of the economy. Goldman didn't originate the mortgages. Mortgage loan officers did. And they would not have been able to do that if large companies like Countrywide and Chase didn't create loans like Countrywide's now infamous Option Arm and Chase's No Doc. The No Doc is where "skinny file" came from. So we, the taxpayers, reward the banks, who did those mortgages, by bailing them out. And then we try to castrate employees who worked at Goldman Sachs who, ethically right or not, were simply taking a position on whether the market would go up or down. They didn't create the mortgage. They didn't let the guy who couldn't afford the house buy it anyway. The Institutional Investors who also took positions on those same instruments also knew they were taking risk. Every Private Placement Memorandum spells that risk out.
I realize your editorial was about energy and commodities, but hedge funds are not mutual funds. Thanks for letting me vent.
John Ulrich
Synergy Financial Group
Germany's Example - April 30, 2010
Germany serves as a "great" example for renewables because their country was rebuilt after World War II from the bottom up. This offers Germany an easy acceptance and adoptability to new ideas because the "new" infrastructure was designed to be adjusted. I do believe Germany serves as an example to countries who can afford to rebuild their entire infrastructure, but this situation is not the norm! I think if you could spend some time on Germany's infrastructure design, before and after World War II, then you would begin to see Germany's example to be a true outlier.
Andy Thompson, P.E., MBA, MHRM
Contrary to popular belief, Germany's feed-in tariff is not paid by the government. Renewable power producers are paid directly by electric utilities, which are reimbursed by a surcharge from electric rate payers. Unlike Spain, the funds are not collected and paid by the government.
Jim White, P.E.
Senior Energy Conservation Engineer
Chelan County Public Utility District
Your article is absolutely correct that the feed-in tariff is very important to the success of green energy (electricity) projects. And because Germany has very high electricity prices, 21.3 euro cents/kw-hr in Berlin in 2009, that feed-in tariff is high and Germany has seen impressive growth of green projects. However the U.S. is blessed with more modest electricity prices, 11.0 U.S. cents/kw-hr average in 2009. With that disparity, it is understandably difficult to replicate German growth in the U.S.
Note also that German natural gas increasingly comes from Russia who has been willing to leverage its position as a supplier of strategic goods for its own purposes, and Germans went cold 16 months ago while Russia and the Ukraine argued about gas prices. Another incentivize for green projects that doesn't exist in the U.S.
David Dixon
Energy Commentator
Germany, and by extension Europe have a different and more powerful motivation to adopt alternative energy than does the U.S. They have few indigenous fossil resources except dirty coal, and are highly reliant on natural gas imports from Russia. The track record of Russia, however, is that they routinely shut off gas deliveries to Europe in the middle of the winter. Given this unpredictability of gas supply, Germany has no other option but to rapidly diversify their energy sources. For this reason, they are moving forward into renewables at one of the fastest rates in the world, regardless of the cost.
Unfortunately, speed of implementation and lack of strong competition (from other fuels) reduces emphasis on cost effectiveness. Germany has the highest feed-in tariffs in the world, and for that reason is not a good model for moving forward.
In the U.S., renewables compete directly with natural gas, which leads to a strong focus on cost competitiveness. The only downside is that renewables become subject to the boom and bust cycles of natural gas (moving from $2 to $15 to $4 over the past 12 years), leading to highly inefficient utilization of renewable development resources. A better model would be a gradually increasing tax on carbon pollution (and liquid fuels), so that a more steady runway for growth and implementation can be realized. We should not be trying to drastically modify our energy sources in 1 or 5 years, it is a 20 to 50 year undertaking. We should approach it as such.
Thomas Conroy
President & CEO
Wind Tower Systems
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