Building Renewable Energy Costs Money
NOV 18, 2023
ROLLAND KIDDER
A lot of public money has gone into building renewable
energy–wind and solar power. Without tax credits, grants and other financial
incentives, a lot of it wouldn’t be built. Tax incentives for energy
development have always been with us, including higher depreciation rates for
oil and gas exploration.
Nevertheless, I don’t think anyone was ready for the
recent announcement by Orsted A/S, the largest energy company in Denmark, that
it was canceling its contract to build two huge offshore wind farms in New
Jersey. It certainly was a surprise to New Jersey which had spent millions of
public dollars preparing to receive the electricity once it reached shore.
Orsted basically said that it was going to lose too
much money on the deal and so was backing out. All of the tax and financial
incentives weren’t enough to make the project viable.
Other wind farm companies, including those involved
with offshore Long Island here in New York State, have also been lobbying for
more money to keep those projects alive. But where does such money come from?
Yes, from you and me the ratepayer. Electricity bills have already been going
up to upgrade the electric grid to accommodate more renewable energy and to
provide capacity for the push to go all-electric on cars and buses.
Some are now “putting on the brakes,” and resistance is
growing as to what all of this is going to cost.
The Public Service Commission recently said “No” to
requests for more subsidies for offshore wind here in New York, and the
Governor also put a “damper” on things when she vetoed a bill which would have
allowed a transmission line connecting offshore power to the grid to cross a
public park on Long Island. (What good is offshore energy if you can’t find a
place to bring it onshore? Do you know anyone who wants a transmission line
built next to them?)
A very significant energy controversy was decided
recently by the public in a referendum that took place this past election day
in the State of Maine. There 70% of voters rejected a proposal that all private
electricity companies in the state be required to sell their assets to a new
state-owned electric company which proponents said would advance more renewable
power and also reduce electric rates and control costs.
What the voters of Maine may have considered before
making this vote was the experience of the “deep thinkers” in New York State
who 40 years ago abolished the privately owned electric utility on Long Island,
and put those assets instead into a shell, state-sponsored, corporation called
the Long Island Power Authority (LIPA.)
That whole fiasco has ended up costing Long Islanders
billions of dollars, of which $4 billion of that debt is still carried on
LIPA’s books as “restructuring bonds” attributed to the cost of dismantling and
decommissioning the only then operating nuclear (non-fossil fuel) power plant
on Long Island.
When you fly over the North Sea adjacent to Denmark and
other European countries, you see hundreds of offshore windmills producing
electricity, so you know that it can be done. Yet, it would appear that the
European experience, including the cost of maintaining these machines in a
harsh environment, has provided a learning curve – a part of that being that
such projects cost big money and that has to be a part of the equation.
There is no doubt that we need more renewable energy in this country. There also is no doubt that the consuming public has to be willing to pay the bill to make it happen.
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