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A Really Big Wind Boondoggle

June 3, 2016

While Forbes magazine discussed the interesting, some might say questionable, politics behind the Block Island wind project, its economics are fascinating.

Rhode Islanders will have the honor of paying twice as much for their electricity as do average Americans.

The project is known as Deepwater Wind, which has ordered 5, 6 MW wind turbines from GE to be installed offshore, just east of Block Island.

Arrow points to Block Island.

Arrow points to Block Island.

Rhode Islanders will pay Deepwater Wind 24.4 cents per kWh, while the average American pays 10.4 cents per kWh. In addition, the price will increase contractually by 3.5% annually, which means Rhode Islanders will be paying around 50 cents per kWh in 20 years.

Meanwhile, factoring in these revenues, plus the federal Wind Energy production credit, Deepwater Wind, according to calculations made by Forbes magazine, could receive approximately $1 billion, with a pre tax return of 7.5% … A virtually risk free investment guaranteed by the government.

The rationale for this boondoggle is that it will cut CO2 emissions.

It’s Senator Sheldon Whitehouse of Rhode Island, who has asked for the RICO anti-racketeering law to be applied to those who disagree with the idea that CO2 causes global warming.

In effect, no one should be allowed to claim that this boondoggle is unnecessary.

The media has reported the investment cost of the 30 MW project is $300 million.

The cost would therefore be $10,000 per KW, which is nearly ten times the cost of building a natural gas combined cycle (NGCC) power plant, where an NGCC power plant costs $1,100 per KW.

While Governor Raimondo of Rhode Island, extolls the 300 local jobs being created by the project, which will be temporary, the real jobs are going elsewhere … to France for the turbines, Spain for the towers, Denmark for the blades, and Louisiana for constructing the platforms.

The average American is footing the bill for this boondoggle. The rate payers of Rhode Island will be paying an exorbitant amount for their electricity, and tax payers elsewhere will be paying for the production tax credit.

* * * * * *

Nothing to Fear, Chapter 6, explains the problems with wind energy.
Nothing to Fear is available from Amazon and some independent book sellers.
Link to Amazon: http://amzn.to/1miBhXy

Book Cover, Nothing to Fear

Book Cover, Nothing to Fear

* * * * * *

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11 Comments leave one →
  1. Ivan Quinchia permalink
    June 3, 2016 10:22 am

    Excellent piece Donn. It’s amazing how a little sugar coating and threats of RICO based lawsuits allowed this project to move forward.
    It will be interesting to follow its performance given the corrosive environment it will be operating in.
    There have been numerous weather related delays which I m sure have increased the cost of the project.

  2. Neil Jones permalink
    June 3, 2016 12:28 pm

    Another well done piece. The threat of RICO prosecution for “non-believers” by Rhode Island’s elected leaders? Scary! We must not yet be finished with New England’s propensity for witch hunts.

    • June 3, 2016 1:29 pm

      Thanks. I hadn’t thought about witch hunts, but it’s apropos.

    • John permalink
      June 3, 2016 5:09 pm

      Neil,

      The RICO story is absolutely not the prosecution of “non-believers”. The senator’s comments were specifically targeting Exxon as it relates to active suppression and manipulation of data. From the Senator himself, a quote:

      On May 6, I gave a speech here on the Floor. The speech compared the misinformation campaign by the fossil fuel industry about the dangers of carbon pollution to the tobacco industry’s misinformation campaign about the dangers of its product.
      The relevance of that comparison is that the United States Department of Justice, under the civil provisions of the federal Racketeer Influenced and Corrupt Organizations statute—RICO for short, brought an action against the tobacco industry. The United States alleged that the tobacco industry’s misinformation campaign was fraudulent. And the United States won, in a lengthy and thorough decision by United States District Judge Gladys Kessler.

      • June 3, 2016 5:18 pm

        Here is the rest of the story, not including how the AG of the Virgin Islands subpoenaed the not for profit CEI with 14 pages of requests for information.
        (CNSNews.com) – Attorney General Loretta Lynch acknowledged Wednesday that there have been discussions within the Department of Justice about possibly pursuing civil action against so-called climate change deniers.

        “This matter has been discussed. We have received information about it and have referred it to the FBI to consider whether or not it meets the criteria for which we could take action on,” Lynch said at a Senate Judiciary Committee hearing on Justice Department operations.

        Equally telling is the editorial or op-ed written by Senator Whitehouse by going to this link http://wapo.st/1t7bgOe

  3. donb permalink
    June 3, 2016 2:57 pm

    As P.T. Barnum said, “there’s a sucker born every minute”. Some are even politicians.

    • June 3, 2016 3:33 pm

      It could be the other way around, politicians are playing people for suckers.

  4. Chris Walcek permalink
    June 15, 2016 11:07 am

    You mention a $10/Watt price, 10X the cost of a conventional power plant. These are costs per ‘nameplate’ capacity. Offshore wind operates about 30% capacity factor, meaning that the real cost per Watt actual electricity production potential is about 3X the cost quoted or $30000 per KW ($30 per Watt)

    • June 15, 2016 11:18 am

      Essentially yes, except offshore wind is expected to operate at around 35% CF.
      Thanks for your comment

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