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June 8, 2010

Brian Bishop on Why the Deepwater Project Isn't a Good Up-Front Alternative Energy Investment

Carroll Andrew Morse

I am usually willing to give the benefit of the doubt to alternative energy projects, on the grounds that I believe that the development of new energy sources which can help the United States reduce its entanglements with demented foreign governments who happen to sit above fossil fuel reserves is, in general, a good thing. Based on this premise, I asked Brian Bishop of the Ocean State Policy Research Institute, who has been lobbying against Deepwater Wind's efforts to establish an offshore wind farm in Rhode Island (as well as a regulatory regime favorable to their efforts), why their project couldn't be regarded as a little upfront investment in this vein...

  • Mr. Bishop agreed that geo-political and environmental considerations are reasonable factors to include in the cost-benefit analysis associated with any energy project (Audio, 1 min 9 sec).

  • But, as far as the Deepwater Wind project is concerned, since Rhode Island gets most of its electricity from natural gas originating in the United States and Canada (Audio, 0 min 27 sec)...

  • ...at a cost of between 6 and 9 cents per kilowatt-hour, and since Rhode Island already has access to renewable energy, sold at prices between 9 and 12 cents per kilowatt hour (Audio, 1 min 49 sec)...

  • ...the price that Deepwater wants to charge for its wind-generated electricity, beginning at 24.4 cents per kilowatt-hour, with a 3.5% automatic rate increase every year, won't ever make economic sense (Audio, 0 min 32 sec)...

  • ...and probably will do economic harm (Audio, 1 min 7 sec).
The numbers presented make a convincing case that the Deepwater project, at least as currently structured, cannot be regarded a serious step towards a permanent, non-subsidy dependent reduction in US consumption of foreign oil.

Comments

Good analysis; go Brian!

I cannot help but wonder, however, when the powers that be that control the state will learn that they must stop maxing out the state's various credit sources. The state is already insolvent - hello?

The state behaves as if its financial house of cards will collapse unless it continues to spend on every suggested project, regardless of how dubious each may be. To the contrary, unless the state learns to restrain its spending, the house of cards will indeed come crashing down.

Posted by: Bill at June 8, 2010 2:15 PM