08/20/09 Pittsburgh, Pennsylvania
Renewable energy — certainly electricity from windmills — has to compete against energy from other sources. The typical base line price competition for electricity is the price for a kilowatt generated in a coal-fired plant. Lately, with the price of natural gas down so low, even gas-fired electricity is competitive with coal. So where does that leave windmills?
Wind-based electricity is still about twice the price of coal- and gas-generated electricity. The thing that’s keeping windmills in the ring is public subsidies like tax credits, as well as large-scale public policy support, like renewable portfolio standards, that requires utility companies to generate certain percentages of ‘green,’ carbon-free power.
While we’re at it, windmill systems are extremely capital-intensive. They require lots of upfront investment in land and leases, roads, grid access, concrete foundations, steel towers and complex turbines and blades. Then you need about three windmills, in different locales, just to assure you have 24-hour power generation — due to the fact that the wind does not always blow when and where you need it.
With the U.S. credit system still broken — and to all appearances, the economy going back into the ‘double dip’ of the Great Recession — things probably aren’t going to get much better for windmills in the next year. Maybe someday. Not now.
Byron King
Byron King is the managing editor of Outstanding Investments and Energy & Scarcity Investor. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. He has conducted site visits to mineral deposits in 26 countries and deep-water oil fields in five oceans. This provides him with a unique perspective on the myriad of investment opportunities in energy and mineral exploration. He has been interviewed by dozens of major print and broadcast media outlets including The Financial Times, The Guardian, The Washington Post, MSN Money, MarketWatch, Fox Business News, and PBS Newshour.
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Mr.King, I am not saying you’re wrong in supposing that renewables are a risky investment these days; what with the low cost of Natural Gas and a market on overall shaky ground. I am however contending that “Wind-based electricity is still about twice the price of coal- and gas-generated electricity. ” is a misnomer. Start-up costs of the particular wind generators you have pictured at the head of your article are indeed higher, but the price/kwh heads to zero over time as the generators produce electricity with little or no added input. Unlike, say, Natural Gas or Coal-fired plants that require constant inputs of, well: natty and coal. And wind/wave electricity generation have the added bonuses of not creating toxic by-products that have to be cleaned up, costs which are a reality, but often ‘externalised’ by industry. Just saying…