Assessing potential for offshore wind power projects

It's an ill wind that blows nobody any good. – English proverb

On October 6, your faithful scribe accompanied citizen activist John Nichols to the first meeting of a high-level working group, which has been tasked with reviewing the desirability of supporting offshore wind power development. [Delaware] Governor [John Carney] launches effort to explore offshore wind power, Scott Goss, News Journal,
8/29/17.

The governor’s
order emphasizes purported benefits of offshore wind power, while only obliquely referring to cost considerations. And the task force seems to be charged with developing a plan for offshore wind projects by mid-December, not assessing the desirability of supporting such projects.

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.

The 19 members of the task force were appointed by an order issued on September 29. State legislators – current and former officials of the PSC and DNREC – public advocate - representatives of several electric power utilities – labor union representative – head of an engineering consulting firm - environmentalists - UD professor. Several members have a track record of supporting “renewable” energy projects, and there are no known skeptics in the mix.

Could conservatives spark some rethinking of this undertaking before it gains political momentum? And what line of attack might be most promising? Let’s begin with some general thoughts about strategy.

A. Aim to win - Government dysfunction is often blamed on the engagement of the two political parties (and their respective supporters) in endless partisan conflict, which makes it difficult for the government to get much of anything done. There was far more civility in the “good old days,” or so it is said. SAFE believes the need for consensus in government is overrated, however, in that:

•Politically active citizens (a minority of the population) are divided into two opposing tribes, liberals and conservatives, whose respective viewpoints were formed early in life. It has even been suggested – by former Vice President Al Gore among others – that the differences are genetically determined. Anyway, the tribal disagreements won’t ever be resolved, although individual conversions do occur from time to time. Never the twain shall meet,
2/4/13.

•Compromise solutions may be in order for quantitative issues (how much?), but if an issue is qualitative (what should we be doing?) it may be better to make a choice than to sweep disagreements under the rug and leave no one accountable for the mess that is left. Why consensus style government won’t work,
6/8/15.

Conservatives are often accused (by the intellectual elite) of being the architects of partisan gridlock and urged to seek common ground with their political opponents, while liberals tend to be praised for their intellectual tenacity. Acting on this suggestion would amount to unilateral disarmament, which conservatives can ill afford. We once made this point with a hypothetical debate about whether the government should reduce obstacles to domestic oil exploration and production. Tip for fiscal visionaries: be persistent or get run over,
4/25/11.

The conservative argument is based on the premise that motor fuel prices are a function of supply and demand, so supply increases should result in lower prices. Instead of agreeing, liberals counter with three successive responses (all of which had been used in recent years): (1) change the subject (e.g. let’s bring back the windfall profits tax); (2) shift the blame (e.g., oil company profits are obscene); (3) brushback proponents of increased production (with emotional appeals, from saving sea lions to combatting manmade global warming). And unless conservatives doggedly rebut every point, they will be vanquished without any discussion of whether oil supply could be increased and motor fuel prices reduced by getting government bureaucrats out of the way.

Here’s another take on how to debate liberals, which focuses primarily on tactics versus specific arguments. Ten rules for debating leftists, Ben Shapiro speaking before the 2016 elections, youtube,
video (21:05). The video is quite enjoyable, but here’s a recap for convenience.

1. Hit first, walk towards the fire.

2. Frame your opponents (rip away their “I’m a better person” façade).

3. Frame the debate (reject and destroy their premises).

4. Spot inconsistencies in the liberal arguments (start by learning these arguments thoroughly).

5. Ask your opponent questions (if you’re on the defensive, you’re losing).

6. Don’t get distracted (you’re talking about Obama’s foreign policy, they yell Bush, respond with Woodrow Wilson or James Garfield).

7. If you don’t know something, say so up front rather than getting trapped (Trump could learn from this tip).

8. Don’t get suckered into defending things you don’t agree with (we may revere Ronald Reagan, but he made his share of mistakes).

9. Let your opponents win meaningless victories, e.g., yes, I’m in favor of immigration reform, but what exactly do you mean by that?

10. Look like a winner – dress well, shave, keep your temper in check, good body language, etc., remember how Nixon lost TV debate with JFK despite winning it on radio.

With these strategic considerations in mind, let’s turn to what went down at the October 6 meeting of the offshore wind power working group.

B. Context – The venue was the Delaware Public Service Commission (PSC) hearing room, 861 Silver Lake Boulevard, Dover. Four tables were arranged to form a box with an open space in the middle; there were padded desk chairs for working group members to sit around the periphery. Facing the box were several rows of armless mesh chairs for reporters, lobbyists and others with an interest in the proceedings. WG members wore business attire; most of the other attendees were dressed casually. Total attendance was perhaps 40.

The action began at 9:00 AM and ran until nearly noon, with a 15-minute break at the halfway mark. [PSC meetings are typically scheduled as morning (starting at 9:00 AM) or afternoon (starting at 1:00 PM) sessions.]

Working group chair Bruce Burcat presided over the meeting. A former executive director of the PSC, he is currently executive director of the Mid-Atlantic Renewable Energy Coalition. Deputy PSC Director Matt Hartigan sat at Mr. Burcat’s right hand and took the lead re discussion of process details.

The agenda items were introductions (in effect, opening statements), the executive order that created the working group, WG process (lots of homework between meetings, PSC staff to research issues raised by WG members or other interested persons), key decisions for the WG, scheduling of future meetings (tentatively 11/1, 11/15, 11/29 & 12/11), and public comments (from non-WG attendees who had asked to speak).

Before the meeting, during the break, and afterwards, there was considerable interaction between working group members and others. Observing the many side conversations, one couldn’t help but think of the incestuous relationship between government officials and the business firms that are affected by their decisions, aka “crony capitalism.”

C. Issues – Several speakers said there was no preconceived conclusion that offshore wind power development should be supported and that any applicable drawbacks would be fully considered. The group would operate in a consensus-building mode, although the chair added that differences of opinion might be resolved by voting.

Given the complexity of the matter at hand, delivery of a well-considered report and recommendations by the December 15 due date might prove challenging. As DNREC Secretary Shawn Garvin put it, the working group would have a “very short runway.” Nevertheless, the next meeting was tentatively scheduled for November 1, with little indication of what was expected to happen in the intervening three weeks.

#COST - The high cost of offshore wind power was identified as a key issue. Some speakers said the extra cost would necessarily be passed on to ratepayers or taxpayers in some fashion, as had been learned from the Bluewater wind project (which fell through after Delmarva Power declined to sign a long-term supply contract) and the Bloom Energy fuel cell project (which resulted in a supplemental tariff for Delmarva Power ratepayers that is running about five times higher than initial estimates).

Other speakers suggested, however, that the cost of offshore wind projects has dropped dramatically in recent years, which trend will continue as the technology advances and projects are scaled up for greater efficiency. “So maybe someone will have to pay a little more,” said one speaker, but “we’re in a completely different world” now.

A News Journal report on the meeting summed up the cost situation as follows. Struggles loom over wind talks, Scott Goss, News Journal, 10/7/17.

While offshore wind has gained a toehold on the East Coast, those projects have come at a steep price. Some estimates have put the cost of offshore wind at three to four times that of other renewable energy sources, such as solar and onshore wind – both of which enjoy federal tax credits that have not been extended to offshore wind.

It might also be relevant to compare the cost of offshore wind power (which is intermittent, and therefore doesn’t support the constant availability of electric power when needed) to that of more reliable power sources such as combined cycle natural gas (CCNG) plants. Here are some data from the federal Energy Department, which provide an order of magnitude comparison. Levelized cost and levelized avoided cost of new generation resources, US Energy Information Administration, Table 1b,
April 2017 (download PDF).


Screen Shot 2017-10-08 at 2.41.12 PM

(1) Table 1a in this report indicates no offshore wind projects are actually being built during the applicable time frame.
(2) As here indicated, our understanding is that the wind production investment tax credit has been equally available for onshore and offshore wind projects. However, there have been demands that this tax subsidy (which is currently scheduled to be phased out) be extended for offshore wind projects. [Sen. Ed] Markey [D-MA] seeks to extend tax credits for offshore wind, Bruce Gellerman, wbur.org,
5/13/17.

One might infer from the EIA data that on-shore wind projects are cost competitive – aside from the difference between intermittent and reliable power (which creates an “apples and oranges” comparison) – while offshore wind projects are nonstarters. End of study, the working group should have little difficulty meeting its reporting deadline.

Unsurprisingly, however, various arguments were offered as to why offshore wind power may be a good idea after all.

#RENEWABLE ENERGY BENEFITS – Environmental and health benefits were referenced, which according to one speaker would amount to 14.3¢ per kilowatt hour – essentially zeroing out projected supply costs. No one questioned this assertion.

Here’s a related point that could have been raised (but wasn’t, except in the public comments of David Stevenson of Caesar Rodney Institute at the end.) Assuming for the purposes of discussion that these renewable energy benefits are realistic, why not build onshore wind projects that would produce electric power at about 1/3 the cost?

#POLITICAL SUPPORT – It was mentioned that a bipartisan coalition of state governors is backing wind and solar power in a big way, including an envisioned string of offshore wind projects along the Atlantic Coast. Here’s a sampling of this effort, which has been enthusiastically endorsed by the American Wind Energy Association. Industry praised bipartisan governors’ wind and solar energy coalition for seeking US agencies’ help to site wind projects, awea.org,
9/9/16.

#GAME PLAN – Mini-presentations were given on (a) how the Bluewater project approach (producer-based) failed, and (b) why the compliance-based approach (involving a new class of renewable energy credits called ORECs) that has been developed for Maryland offshore wind projects may be more workable.

Someone sounded a note of caution, however, based on how the electric power distribution sector is structured in Delaware. The qualified fuel cell provider (Bloom Energy) tariff imposed on Delmarva Power customers isn’t applicable for customers of other distributors (e.g., Delaware Municipal Electric Corporation). It would be politically awkward to single out Delmarva Power customers like this again.

#GREEN JOBS – Several speakers spoke of the job-creation possibilities if the US could wrest domination of the offshore wind power industry away from Europe, which has been building these facilities for years and makes the turbines, supplies the lift boats, etc. Imagine the possibilities if laws could be passed requiring the components to be assembled locally, etc., and Delaware was able to exploit its geographical location to become a hub for some part of the supply chain. Wow!

D. Public comments – With about half an hour left before lunch, the chair asked that the non-WG speakers limit their remarks to about 5 minutes. This part of the program was not covered in the News Journal report nor, so far as we know, any other media coverage. Nevertheless, some interesting points were made.

#
John Nichols had prepared a 2-minute statement. Given the extra time, he prefaced it by suggesting “two giant steps backwards.”

First, the manmade global warming theory is full of holes – and the working group should schedule a public debate of the subject to ensure that all bases are covered before any offshore wind projects are endorsed. The dueling climate experts could be David Legates of UD and Katharine Hayhoe of Texas Tech.

Second, the state of Delaware has deep fiscal problems, and it simply cannot afford another “bloomdoggle” project – so why study the idea?

At about this point, the chair suggested that the speaker was approaching the end of his time, at which point Nichols sped read his prepared remarks into the record. Here’s a paraphrase.

Don’t count on the lure of “green” jobs, remember how Bloom Energy over-promised and under-delivered. Also, job losses due to surging electric power costs will outweigh the green jobs created. See the famous Spanish study on experience in that country.

US Energy Department statistics show that offshore wind power costs far exceed the cost of power generated from combined cycle natural gas.

Intermittency of wind power is huge. Studies from the Electrical Reliability Council of Texas indicate that wind provides only 5% nameplate capacity on some peak demand days. “Atlantic Coast wind will be as bad or worse – when needed the most.”

Conventional or nuclear power sourcing is essential for grid reliability, and wind power only temporarily displaces reliable energy sources – coal, nuclear and natural gas – while adding little to grid capacity.

In sum, “the guaranteed manufacturing job losses due to subsidized green jobs, and the high cost of electricity, relegates big wind to the scrap heap of historically bad ideas.”

#
Dave Stevenson recapped his analysis of the Maryland offshore wind power proposals, provided a 6-page handout, and offered to come back and make a longer presentation on the subject. In brief, the proposal reminded him of the Bloom Energy fuel cell proposal, which was waved through without a proper understanding of the commitments being made. And even if Delaware did decide to install some wind power capacity, it would make far more sense to go for on-shore wind facilities.

#
A former Bluewater Wind employee (didn’t catch her name) said most of the questions about the cost of offshore wind, etc., have already been studied in Europe so the working group/PSC staff wouldn’t need to start from scratch.

E. Reflections - In closing, the chair characterized the session as “extraordinarily productive.” We would be inclined to a more measured view, but were encouraged that some questions about the offshore wind proposal were put on the record. Consider the comments of DE Senator Harris McDowell (D-Wilmington), which were prominently quoted in the News Journal story.

[McDowell] warned his fellow task force members against rushing into a conclusion without considering all the potential pitfalls – an approach he later compared to the 2011 deal with Bloom Energy that has cost ratepayers roughly $150 million [total increases about $3 million per month]. “We really need to do our due diligence to make sure we’re not forcing a project into life because we want it to come. We should do it because it makes sense and not because we dream or wish the benefits would be true.”

As for what impact conservatives can hope to have in the offshore wind power discussion, it looks like another uphill battle to get our views taken seriously. Kudos to John Nichols and Dave Stevenson for their yeoman efforts!

One suggestion for the path forward: The working group could complete a meaningful review of this matter within the time allotted if, but only if, it was willing to rule out offshore wind projects based on inordinate costs. Otherwise, it should contact the governor and urge that the reporting deadline be extended to, say, September 28, 2018.

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