High Renewable Energy Costs Damage the Vermont Economy
With regard to renewable energy, it DOES matter what Vermont does, especially if it is on the wrong track to the detriment of Vermont’s economy, which has been in an about 0.85% per year growth mode since about 2007, with declining real household incomes since about 2000, while state spending increased at a greater annual percentage.
As shown below, Vermont’s renewable energy programs, such as SPEED, are wasteful, because they produce energy at 3 - 4 times New England annual average grid prices, which is unsustainable, especially in a near-zero-growth economy. Scarce capital should be spent on increased energy efficiency, not wasteful renewable energy programs. It would be a much better way forward for Vermont, as it would reduce the energy bills of households and businesses.
Already-struggling households and businesses have been dealing with a near-zero-growth Vermont economy since 2007, with the tax-burdened, hollowed-out, private sector shrinking relative to the growing, bloated government sector, which is acting as a wet blanket on the private sector, a sure recipe for economic stagnation, lack of well-paid employment growth (except in government), or worse.
At some point, clear-headed thinking must prevail, budgets must be cut, taxes must be reduced, wasteful programs must be eliminated, or else Vermont's hollowed-out, private, tax-paying economy will continue on its near-zero-growth path, less and less able to scrape up enough money to pay for the rapidly-increasing expenditures of the growing, money-guzzling government sector.
HOUSEHOLD INCOMES, STANDARD OF LIVING, HOUSEHOLD ELECTRIC RATES
Declining Real Household Incomes: Real household incomes of the middle, 4th and bottom quintiles peaked in 2000, 2000, 1999, respectively; in those peak years their incomes were $56,311, $33,815, $13,663; in 2012 their real incomes were $51,179, $29,696, $11,490, for a decline from peak year of 9.1%, 12,2%, 15.9%. The bottom 60% of households with steadily declining real incomes! No wonder their part of the economy is in near-permanent recession.
Vermont Standard of Living: The Vermont cost of living is about 20% greater than of the US, whereas, in 2012, Vermont’s real household income was about 3% greater than of the US, meaning the standard of living in Vermont is already about 17% lower than in the US. See below data and URLs.
US: 2012, $51,371; 2011, $51,557; 2010, $52,703; 2009, $53,760; 2008, $55,484; 2007, $56,189; 2006, $55,176; 2005, $54,387
VT: 2012, $52,977; 2011, $53,878; 2010, $52,029; 2009, $55,256; 2008, $55,564; 2007, $55,266; 2006, $54,281; 2005, $53,733
Cost of Living Index, by state
Household Electric Rates: Vermont’s household electric rates used to be the lowest in New England, but have been rising faster than of other New England states and are now the 4th highest in the US, after Connecticut, Alaska and Hawaii.
Rates in November 2013, c/kWh, all taxes and fees included: VT 17.54, CT 18.21, Alaska 18.33, Hawaii 37.34
INCREASED ENERGY EFFICIENCY
Vermont would have a much bigger bang for the buck, i.e., reduce more CO2 per invested dollar, if it practiced increased energy efficiency, starting with:
- A strict energy code for NEW, subsidized, net-zero-energy buildings, instead of expensively subsidized renewable energy projects; there is no money to do both at the same time. Imposing new carbon taxes, increased EV surcharges, etc., thereby further harming Vermont’s weak economy, is not and option.
- Increased surcharges on electricity guzzling households; the greater the consumption, the greater the surcharge percent; the surcharge to be collected each month. Such households would quickly find ways to reduce their electricity consumption.
- Increased surcharges on gasoline- and diesel-guzzling light duty vehicles, i.e., cars, minivans, SUVs, ¼-ton trucks; the greater the gas guzzling, the greater the surcharge percent; the surcharge to be collected at time of annual registration. Such vehicle owners would quickly find ways to reduce their gas and diesel consumption, such as by driving fewer miles.
The above measures would quickly reduce CO2 emissions and raise revenues to subsidize weatherizing the housing of lower-income households and net-zero-energy buildings.
Efficiency Vermont Not Cost Effective: Efficiency Vermont spends about 45% of its budget on Salaries, Benefits, Payroll Taxes, etc., for its 180-person staff, plus General & Administration. The other 55% is used to subsidize energy efficiency projects. That is a very inefficient way to do energy efficiency. Some other way has to be found before the EV budget, apparently on autopilot, goes to the scheduled $85 million.
Whereas, EV year-end balance statements of the early years could be deciphered, this is not the case with the amalgamated Vermont Energy Investment Corporation year-end statements, unless a person is a very experienced CPA and has the statements explained to him by insiders.
Setting up EV and VEIC may have been attractive some years ago, but the actual results do not justify their continued existence. It would be best, if EV and VEIC were declared expensive, ineffective failures, and ALL the money (about $85 million/yr and increasing) used to subsidize weatherizing low-income housing and net-zero-energy buildings.
There would be no need to have a carbon tax, etc., and Vermont ratepayers would see about a 5% reduction in their electric bills due to the EV surcharge being ended!
Vermont builders were building net-zero-energy buildings before EV even existed. There is no need for EV to tell them how to do it.
In Denmark, ALL new housing must be net-zero-energy. Vermont should follow THAT example, instead of destroying ridgelines and coddling in-state and out-of-state multi-millionaires, with tax shelters, to build 2.2 MW solar plants in meadows, and have the PSB “compensate” them (fatten their tax shelters, at the expense of already-struggling households and businesses) at an outrageously high 27 c/kWh, whereas, according to David Hallquist, CEO of VEC, solar energy costs about 17 c/kW for 1,000 kW systems and up.
NOTE: Vermont's government makes lots of high-sounding pronouncements regarding energy efficiency, but does not practice it!!
Vermont State Government buildings: average 107,000 Btu/sq ft/yr for heating, cooling and electricity. Energy efficient buildings would use about 25,000 Btu/sq ft/yr. http://www.publicassets.org/PAI-IB0806.pdf
The Xerox Headquarters, Stamford, CT, placed in service in 1979, needs only 28,400 Btu/sq ft/yr for heating, cooling and electricity, without the benefits of PV solar panels, geothermal heating, or solar hot water heating. Nearby similar headquarters buidings needed at least 50,000 Btu/sq ft/yr.
VERMONT RENEWABLE ENERGY PROGRAMS ARE TOO EXPENSIVE
Vermont has subsidized about $510 million of solar and wind investments (about $190 million for solar + about $320 million for wind), over the past 3.5 years, and has practically nothing to show for it; about 0.83% of Vermont’s annual consumption from solar and about 3.89% from wind, for a total of 4.72% of Vermont’s annual ELECTRICAL ENERGY consumption, or about 4.72/3 = 1.57% of ALL annual energy consumed by Vermont.
That is a long way off from the unrealistic, starry-eyed, 2011 Comprehensive Energy Plan goal of 90% of ALL annual energy consumed by Vermont from renewable sources by 2050, not just electrical energy which is only 1/3 of ALL energy.
How many tens of billions of dollars would that take? Oh, about 90/1.57 x $500 million = $28.7 billion over 2050 - 2013 = 37 years, or about $0.775 billion per year.
The 90% goal would impose on Vermont's economy job-destroying household and business electric rates at least 3-4 times current levels. See below article on Germany.
It is likely that goal was set without any realistic, in-depth analysis, which should have been included in the 2011 CEP report for all to see. Poor Vermont’s goal is more extreme than rich Germany’s ENERGIEWENDE goal.
NOTE: It is amazing the Department of Public Service does not keep track of these numbers and post them, along with other project data, in spreadsheet format, on its website. Even for the expert, it takes quite some effort to gather the information from various sources.
Vermont annual electrical consumption is about 5,600,000,000 kWh/yr. The SPEED program has a goal of 20%, or 1,110,900 MWh, of total statewide electric retail sales be generated from NEWLY-BUILT RE projects, including solar, wind, biomass, landfill gas, farm methane, and hydro plants, by end 2017.
The SPEED program has two categories of projects:
- 2.2 MW or less, Standard Offer, feed-in tariffs set by the PSB.
- Greater than 2.2 MW; owners sell to utilities under PPAs at about 10 c/kWh, or 2 times NE grid prices.
Projects 2.2 MW or less, Standard Offer
The Standard Offer part of the SPEED program has a capacity target of 127.5 MW installed by end 2017.
The SPEED program, with help of subsidies from the Clean Energy Development Fund, produces expensive energy. Adding more money to the CEDF would worsen a bad situation.
To facilitate chasing subsidies, the CEDF and SPEED program were created by RE promoters, some of whom decided to resign from the CEDF board, because of conflict of interest, as they owned RE businesses that built CEDF-subsidized and SPEED-subsidized projects.
Here are the production results for the SPEED Program, 2.2 megawatt or less:
2010........5,980,779 kWh........0.1387 $/kWh; July - December
2011......20,172,973 kWh........0.1644 $/kWh
2012......29,666,592 kWh........0.1716 $/kWh
2013......44,822,813 kWh........0.1919 $/kWh
Note the RISING trend, whereas RE promoters were claiming RE rates would decline.
NE annual average grid prices are about 5 c/kWh.
Such high RE energy costs will increase Vermont household electric rates, which already are the 4th highest in the US, right after Connecticut, Alaska, and Hawaii.
Solar SPEED is compensated at an outrageously high 27 c/kWh for ALL energy fed into the grid, and non-SPEED, mostly roof-mounted solar systems, is compensated at the electric rate + 6c/kWh, for all energy produced, in the GMP North service area. In the GMP South service area different, less generous, rules apply.
NOTE: The SPEED value of 27 c/kWh is at least 10 c/kWh too high. According to David Hallquist, CEO of VEC, it should be 17 c/kWh for systems 1,000 kW and up. That value is of great benefit for the tax shelters of multi-millionaires, but excessively increases the electric rates of already-struggling households and businesses.
In-state and out-of-state multi-millionaires with tax shelters, who put up "PSB-approved", heavily-subsidized, $10 million (less tax credits, grants, depreciation), 2.2 MW solar systems in Vermont meadows, get compensated at 2,200 kW x 8,760 hr/yr x CF 0.14 = 2,698,080 kWh x 0.27 c/kWh = $728,482 per year for 25 years!!! A gravy train, if ever there was one. That energy could be bought from the grid at 5 c/kWh, or $134,904 per year. The difference, $593,578, gets charged mostly to household electric bills. Multiply that by, say, 20 systems and we are talking real money.
Projects greater than 2.2 MW
The following wind turbine plants in the Greater than 2.2 MW category, with their estimated annual energy production and capacity factors, are listed on the DPS website:
Granite Reliable ..........215,496 MWh, Coos County, NH. GMP contracted to buy 55% of the output for 20 years starting April 1, 2012.
Sheffield.......................103,372 MWh.........CF 0.295
Lowell..........................182,909 MWh..........CF 0.331
Georgia.........................27,000 MWh..........CF 0.308
Here are the 2013 expected ridgeline wind production results:
Sheffield….. 40 MW......$120 million.........…83,395 MWh...........CF 0.238
Lowell*…. …63 MW......$170 million.........113,687 MWh...........CF 0.206
Georgia…....10 MW........$28 million..........21,024 MWh............CF 0.240 Est.
Total........113 MW.......$318 million.........218,106 MWh
*Includes grid and substation upgrades and $10.5 million synchronous-converter system mandated by ISO-NE.
Note the much lesser ACTUAL production, MWh and CFs, versus the optimistic values indicated on the DPS website.
1) Lowell Mountain, capacity 63 MW, capital cost about $170 million, 11-month production = 104,213 MWh in 2013; CF = 0.206, which will not become much greater with the ISO-NE mandated $10.5 million bank of synchronous converters.
Estimated heavily-subsidized energy production cost of 15 - 20 c/kWh, based on 20-yr life, low ridgeline CF, high ridgeline O&M cost/MWh, high capital cost/MW, and much less revenues from Renewable Energy Certificates due to less energy production.
Estimated production 63 x 8760 x 0.2842 = 156,844 MWh/yr, with standard rotor.
Estimated production 63 x 8760 x 0.3587 = 197,959 MWh/yr, with 373 ft rotor.
Estimated production 63 x 8760 x 0.3380 = 186,570 MWh/yr, per GMP website.
Actual production in 2013: 63 x 8760 x 0.206 = 113,687 MWh.
NOTE: Green Mountain Power testified to the PSB, the CF would be 0.3587, “with the bigger rotor”. See URL
Already-struggling Vermont businesses and households in GMP’s service area, about 70% of Vermont ratepayers, will be on the hook for the extra Lowell costs for 20 or more years. GMP will not suffer, because it will roll all its extra costs into rate schedules, per PSB approvals.
2) Sheffield Mountain, capacity 40 MW, capital cost about $120 million, 11-month production = 76,329 MWh in 2013; CF = 0.238; better than Lowell, but much less than the predicted 0.33 or better.
3) Georgia Mountain, capacity 10 MW, capital cost about $28 million, 11-month production in 2013 likely was similar to Lowell and Sheffield.
SOLAR AND WIND ENERGY, percent of total consumption
Solar: Total energy from solar from about 38 MW of panels, SPEED and non-SPEED, in 2013, was about 38 MW x 8,760 hr/yr x capacity factor 0.14 = 46,603 MWh.
Vermont consumption is about 5,600,000 MWh/yr, of which about 46,603/56,000 = 0.83% from solar, mostly SPEED solar.
Capital cost, nominal dollars, was about 38 MW x 5.0 million/MW (3.5-yr average price) = $190 million over the past 3.5 years. It would take 20/0.83 x $190 million = $4.6 billion to get 20% from solar.
Wind: Total energy from wind, in 2013, was about 218,106 MWh.
Vermont consumption is about 5,600,000,000 MWh/yr, of which about 218,106/56,000 = 3.89% from wind.
Capital cost, nominal dollars, was about $320 million over the past 3.5 years. It would take 20/3.89 x $320 million = $1.645 billion to get to 20% from wind, plus at least $0.5 billion for grid upgrades.
Vermont’s Wind Energy Scam: Vermonters are the victims of a grand scheme to promote heavily subsidized, expensive wind energy on ridgelines, primarily to schlep as much federal subsidies to Vermont as possible. Reports were written about the abundance of wind on ridgelines, and it being a great renewable energy source for Vermont, and leading to energy independence, and creating jobs. No more reliance on those dirty fossil fuels and that dangerous Vermont Yankee.
The CEA report was written for Vermont utilities to guide them towards renewables. CEA based its analyses on CFs = 0.33, quoting "Vermont sources". Page 23
After the CEA report was issued, Blittersdorf, a Vermont wind guru, owner of 10 MW Georgia Mountain, helped James Moore write the VPIRG "Repowering Vermont" report, which used wind turbine capacity factors of 0.33, quoting the CEA report, which quoted "Vermont sources". Yikes! And Vermont legislators were fed this garbage, believed it, and enacted laws accordingly, even though evidence of poor CFs of Northeast wind turbine plants already existed.
REGIONAL WIND TURBINE CAPACITY FACTORS
Wind energy promoters have testified before the PSB that their ridgeline wind turbine plants will have CFs of about 0.33 or better. Actual production results in Maine, New York, indeed all of the Northeast, have shown their testimony as not valid.
Here are the official regional 2012 CFs for NEW projects commissioned in 2010 and 2011:
See page 48 of URL.
Maine and New York have CFs of 0.25 and 0.235, respectively.
HIGH RENEWABLE ENERGY COSTS DAMAGE GERMANY'S ECONOMY AS WELL.
A Lesson for Vermont: It is clear from the German RE "leadership" example, Vermont’s 2011 CEP goal of 90% of ALL energy from RE by 2050 (not just electrical energy which is only about 1/3 of ALL energy), whereas a technical possibility, would not be economically tenable, even if other New England states had similar ambitions to handicap their economies, businesses and households.
Vermont’s cost of living index would become so high, many people would vote with their feet, after having been unable to make Montpelier mend its ways.
BTW, poor Vermont's 90% goal is much more ambitious (starry-eyed, irrational?) than rich Germany's goals.
Photo Credit: Vermont and Renewables Costs/shutterstock
Willem Post, BSME'63 New Jersey Institute of Technology, MSME'66 Rensselaer Polytechnic Institute, MBA'75, University of Connecticut. P.E. Connecticut. Consulting Engineer and Project Manager. Performed feasibility studies, wrote master plans, evaluated and performed designs for incineration systems, air pollution control systems, utility and industrial power plants, and integrated energy ...
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