May 3, 2010

Changing the Rules for "The Next Big Thing"

Justin Katz

Special deals. Special laws. Once the state starts taking this sort of step, we're well past the point of reasonable accommodation for an incipient industry:

State lawmakers are attempting to breathe new life into a stalled proposal for an eight-turbine wind farm in waters off Block Island through legislation that would allow the project to bypass a difficult regulatory hurdle.

A bill filed late Wednesday would make it possible for developer Deepwater Wind and National Grid, the state's main electric utility, to enter into a power-purchase agreement without having to win approval from the state Public Utilities Commission. ...

Instead of the PUC, approval of a new contract for Deepwater would be in the hands of the appointed directors of four other state agencies: the Division of Public Utilities and Carriers, the Economic Development Corporation, the Office of Energy Resources and the Department of Administration. All four agencies would have to certify an agreement for it to go into effect, but they would each be given very narrow parameters for their review.

Deepwater and its government supporters didn't get the result they wanted through the normal path — permission to force energy consumers to pay three times the going rate of electricity for its product — so the latter are changing the regulatory path and putting blinders on the regulators. Whatever good intentions may lie behind such initiatives, this sort of special treatment should be a red flag for voters and legislators and is a bright beacon for corruption.

Amy Kempe, Carcieri's spokeswoman, said the introduction of the bill had no connection to the Cape Wind decision. Approval of the Massachusetts project, she said, only buttressed the belief held by Carcieri and House and Senate leaders in the promise of a national offshore wind industry.

"Yesterday's announcement shows that this is a viable industry," she said Thursday. "It is going to be moving forward."

It appears that Ms. Kempe misses the distinction between evidence that an industry is viable and evidence that it is politically popular. The former means that people are willing to allocate their own money for a good or service; the latter means that elected and bureaucratic officials are willing to allocate other people's money for it. The standards for success are clearly quite different.

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I don't think she missed anything. In Rhode Island, industry really has become what the special interests can convince state government to buy from them.

Posted by: Dan at May 3, 2010 11:22 AM

I think there is a money trail here to be exposed.

Posted by: BobN at May 3, 2010 11:50 AM

"Google (GOOG) disclosed in a blog post this morning that on Friday it invested $38.8 million in a pair of North Dakota wind farms developed by NextEra Energy Resources, a unit of FPL Group (FPL)."

Hmmm, so either Justin is right or Google is right.....I pick Google.

Posted by: Stuart at May 3, 2010 2:54 PM

Sigh, meanwhile the Germans move forward, happy to develop the technology we'll be buying from them in 20 years, while bemoaning "why don't we have more venture capital in Rhode Island?"

Profit potential fuels offshore wind ventures

Posted by: Russ at May 3, 2010 4:35 PM

The Germans aren't doing anything more technically advanced than companies funded by US venture capital are doing. False argument by phony example of non-superiority.

Posted by: BobN at May 3, 2010 4:58 PM

Go Nukes !!!

Posted by: tcc3 at May 3, 2010 8:02 PM

Another unresearched factoid that fails to support the commenter's point (that is, if he had a point). It is possible that there are wind projects that do not rely on government subsidies or government-mandated, extortionate pricing for financial viability. Perhaps that is one, although I doubt it. More likely there is government finagling that makes this a deal for Google.

Additionally, these clean energy deals benefit from tax credits which are leveraged by adding debt, so Google's tax benefits over the first 1-3 years would typically exceed the amount of its investment - free money at the taxpayers' expense for a deal whose cash flows are guaranteed by government. Sweet.

Posted by: BobN at May 4, 2010 7:45 AM

Of course, Bob, you forget to mention the vast amount of government help for oil and gas drilling - to the tune of 10's of billions in just the last couple of years!

And, you somehow missed the factoid about the nuclear power industry being unable to even exist (they could not get insurance!) without government actually passing a law that gives them immunity.

Oh, those inconvenient facts again!

It must be really easy to try to make a point when you simply apply blinders to everything else....which the government helped popularize....from THIS internet to the telegraph to the railroads to airplane travel.....Yep, it would not have happened as quickly if not for that big bad government.

On a basic intellectual level, though, you really MUST have some basis as to why wind energy is different than oil...why oil can be given credits, and not wind?

You must also have worked it out in your mind why Bush and Cheney were oil people, and yet must have had nothing to do with "blessing" oil.

Please enlighten us.

Posted by: Stuart at May 4, 2010 8:30 AM

"The Germans aren't doing anything more technically advanced than companies funded by US venture capital are doing. False argument by phony example of non-superiority."

Perhaps, but they are doing something we're not doing in RI, creating jobs.

Failing German Shipyard Saved by Wind Power

Nordseewerke, a shipyard in Emden, Germany is undergoing a 40 million Euro refit as part of plans to transform the facility into a ‘hub' for offshore wind turbines. More than half of the 1,200 people who were working at the yard when the global economic crisis hit the shipbuilding industry in 2008 will now build underwater foundations, tripods, platforms and towers for offshore wind turbines.

And guess who's already buying from them?

It appears, however, that Germany has once again stolen a march when it comes to renewable energy. The UK implemented a feed-in-tariff a full ten years after the Germans and when the US approved its first offshore wind farm, Cape Wind, last week, it was also announced that the turbines are to be provided by the German company Siemens.
Posted by: Russ at May 4, 2010 9:34 AM
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