Category — Energy Myths vs. Reality

Germany is a country that has been a leader in many aspects of “clean” energy development during the past decade.  They were among the leaders in establishing pricing mechanisms for wind and solar, phasing out nuclear power and granting incentives to biomass energy producers.  Germany has the highest proportion of wind in its generation mix, now around 20%, but is no longer the absolute installed capacity leader behind the U.S. and China.

With a vast investment in above-market generation resources some in Germany are channeling “Mad Man Muntz” of early US television history – “lose money on every sale but make it up with the volume.”  It did not work for Muntz TV and it will not work for Germany.

A New Fairy Tale, Starring Wind Energy Generators

Lately, a story has gone round with the following general points:

• Assume that the marginal cost of wind is the lowest of all existing generation plant types;
• Assume that power pools in NW Europe accept generator bids based strictly on the marginal energy cost (MEC)
• Assume that wind can be the marginal generation resource during some peak periods
• Assume further that this MEC sets the price on the pool for those time segments (30 minutes) where wind is the marginal producer, and therefore
• Wind, by setting the MEC during some peak demand periods, will reduce the price of energy during such periods and save consumers money.

In other words, even though wind generators are more expensive to build and require above-market prices to sustain, somehow they are able to reduce prices across the power pool.

This would certainly be a neat trick if someone could do it. [Read more →]

In the face of a changing fiscal and political environment, Congress and various states are belatedly rethinking their far-flung  efforts to restructure and regulate the nation’s energy markets. The opportunity is to change course and base their actions on facts, not emotion–and slow down and even reverse governmental largesse. The global warming scare has been cut down to size, after all, and the problems of politically dependent energies are more evident than ever.

Too many legislators and interventionists cling to basic energy myths, however. Here are five major ones.

Myth: Foreign Oil Provides Most of Our Energy

According to the U.S. Department of Energy and the Energy Information Administration, oil represents less than 40% of our energy use. A full two-thirds of that oil comes from North America, primarily Canada, not the Middle East.

A related myth is that alternative energy sources will reduce the use of petroleum. Such sources may first reduce domestic production, but they will not appreciably affect production in unstable regions.

Renewable technologies are subject to import and price security concerns as well. And the equipment for 65% of the wind installations in the U.S. in the past five years have come from foreign sources, including China. Moreoever, rare earth metal ores such as lanthanum and neodymium are vital to electric car batteries and some renewable energy are concentrated in China, for example, and Beijing favors export restrictions.

Myth: Renewables Will Replace Conventional Energy Sources

A correlated and persistent myth is that increasing wind- and solar-generated electricity will reduce our dependence on foreign oil and thus boost our energy security. Less than 1% of our electricity is generated using petroleum, so any renewable generation will have no appreciable effect on petroleum demand. [Read more →]