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Web Letter

Ms. Featherstone's article was a nice fluffy overview that passed on the "crux of the biscuit," so to speak. Oh well, maybe it is "too wonky," but I mean the issue of how to pay for these renewable energy systems we so desperately need (for jobs, for replacements to polluting and risky electricity production like coal, natural gas and nuke-based systems, and so we don't have to export money for fuels like natural gas and coal).

Not all renewables will work in places like NY State. However, there is more than enough potential from run-of-river, tidal and especially onshore and offshore commercial scale wind turbines to more than power up NY, and this can be done at prices near the current going rates. However, approaches like photovoltaic will always be very expensive--a consequence of living where there is a lot of rain and snow (but no deserts, either).

What is needed is an economic arrangement that takes into account the capital-intensive nature and the price stability that comes from having moving air and moving water as an energy source. The US has a "welfare for the really really rich" system of renewable energy financing, and it produces less than desirable quantities at prices higher than are necessary. This system also maximizes economic risk in conjunction with NY State's "casino electricity pricing," alias the NYISO system. There are better ways than to shovel boatloads of tax credits and tax deductions to the upper 1 percent of the economic pyramid.

In much of Europe, they use a more "adult" system known as feed-in laws. This delivers more energy at lower cost and at no loss to taxpayers. To realize the "45 x 15" goal, NY will need this approach. And this will also maximize the possibility of getting renewable energy manufacturing in this state. Without a feed-in law system, NY will be a major loser in the renewable energy industry, and this is an industry that was $17 billion in size for wind alone in the US in 2008, growing at about 60 percent a year. It could be bigger than the auto industry with feed-in laws, but without this sensible economic approach, we will end up continually poorer every year.

So, maybe you should do an article on how to make renewable energy profitable. We already have way too many fluff articles on this topic.

Below is a summary of this better approach.

Renewable Feed-In Laws (RFILs)
1. Proven best method to commercialize renewable energy (RE), add RE capacity
2. Fairest, most democratic and also very sensible capitalist economics for RE
3. Overcomes lack of external costs paid by polluting (fossil, nuclear) generators
4. Stabilizes electricity prices initially--provides ceiling to prices, price predictability
5. Results in lower electricity prices over the long term (ten-to-twenty-year period)
6. No taxpayer subsidies or loss of tax revenues required--more taxes collected
7. Gradually ramps electricity prices to real, unsubsidized levels; encourages efficiency
8. More RE installed in less time at lower cost compared to subsidy and quota methods
9. Provides reasonable returns on investments, minimizes price swings from speculation
10. Will provide a buffer to future adverse effects of Peak Oil, Peak Natural Gas

RFILs work in the following manner:
a) Feed-in prices for various technologies (wind, biogas, tidal, solar) openly arrived at; these allow for a reasonable return on investments and are set by the state
b) Long-term contracts provide fixed or declining known prices to generators
c) Grid operators required to accept RE feed-in energy on a first-priority basis
d) Costs or benefits of these fixed prices shared by customers of grid electricity on a usage basis--long-term result is lower, more stable electricity prices
e) RFILs result in lower financial risk for investors; RE projects are usually very capital-intensive, and most or all investment is required before generation can begin.
f) The marginal cost of RE is much lower than fossil fuel generation--there no or little fuel or waste costs, and all external costs are incorporated in energy production
g) Lower financial risks and stable production costs result in lower financing costs; since most of the energy production cost is financing/return on investment, this results in lower installed RE costs as compared to higher risk/fluctuating price markets
h) A very fair system--minimal barriers to entering this business--amenable to municipal governments, cooperatives, partnerships, small and large businesses

Reference Sites:
Wind-Works.org
On the proposed Indiana law: Alliance for Renewable Energy; "Advice to Pres. Obama: go for wind power," from the European Tribune; German WindEnergy Association; and "What Happens If Wind Energy Gets Successful in the U.S.A.?," by yours truly,

David Bradley

Buffalo, NY

Feb 3 2009 - 2:31pm

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