The Spirit of Canute Is Still With Us
As other people's money runs out, green energy companies are crashing faster than Wall Street in 1929. Canny folk who did not get caught up in the "flavour of the month" euphoria surrounding wind power and solar power have that "I told you so" look on their visages. It has taken a few years for the money to run out, but green companies are now crashing and burning.
The great and noble cause of facing what President Obama grandly and sonorously declared to be the greatest strategic threat before mankind--global warming and balmy temperatures--is turning out to be a stinky dog's breakfast. Almost every day now we are hearing about the collapse of another green company. The first high-profile company collapse was Solyndra--millions of millions of tax payer funds were flushed down the sewer. Never mind, you can't make an omelette without breaking some eggs, said Pressie Obama at the time. Double the recipe and do it again.
In November last year, on the verge of the wondrous Paris global talkfest on combating climate change, the Spanish company, Abengoa SA announced that it was entering bankruptcy. Abengoa was a global conglomerate specialising in wind farm construction. President Obama had astutely seen the inevitable and months before the Abengoa was heading into administration, investing millions of dollars into a couple of California wind farms to be built by (you guessed it) Abengoa. It helped stave off the company's collapse by a couple of months.
The Obama administration also loaned solar panel manufacturer Solyndra over $500 million in government loans and continued to prop up the company even after it had clear evidence Solyndra was failing. The Obama administration has also loaned millions to the electric car industry — and many of these companies have spectacularly collapsed.
Obama touted GM’s Chevy Volt and last year said there would be over a million Volts on the market. Chevy, though, could not sell the cars because of poor consumer demand. One writer referred to the Volt as “Obamacar” and predicted the Volt’s failure foreshadowed the results of “Obamacare.” Chevy temporarily ceased production of the vehicle. The company that supplied batteries for the Volt went bankrupt.
Then there is A123 Systems, which supplied defective batteries to Fisker Automative, an electric car company that was the beneficiary of $193 million in green energy loans from the Obama administration. Fisker was slated to get $529 million in loans before payments were suspended because the company was failing. In mid-October, A123 Systems, after receiving nearly $250 million in green energy loans, filed for bankruptcy.
In 2011, Obama touted A123 Systems in a speech on green energy. “There’s A123, a clean-energy manufacturer in Michigan that just hired its 1,000th worker as demand has soared for its vehicle components,” Obama said. “Companies like these are taking root and putting people to work in every corner of the country.” [Breitbart News, November 2012]
The fundamental problem is that the demand for green energy is grounded in a peculiar political ideology. It is not based upon market demand, consumer demand, or energy shortages. It is an ideological construct. Hence, since there is little to no market demand, governments believe they have to step in with an artificial, contrived demand. There is a kind of market demand for wind power and solar power: governments are demanding it, and funding it with your dollars.
But when taxpayer funds run out, the whole house of cards comes tumbling down. That's what we have seen consistently over the past five years.
Wind farms are just far too expensive to construct; they are energy inefficient; their maintenance costs are far too high. The only thing which makes them economically "feasible" is ideological capital bestowed upon them by central governments.
In New Zealand one of our electricity companies, Meridian has invested heavily in wind farms. It is now struggling to reduce operational costs. It has fired the expensive maintenance services from the overseas suppliers of the wind farms; it is now building maintenance capability and intellectual property in-house. It claims it can reduce maintenance costs accordingly. Good luck with that. The commercial reality is that wind farms are notoriously expensive to construct and maintain; they are grossly inefficient. At best they require back up generation because the wind is unreliable. When you factor in the capital cost of back-up supply to make wind farms feasible, the actual costs of wind power are off the charts. Its costs are a twofer for one.
This is the fix in which Europe's ideology has now landed. As Terry Jarrett explains:
Countries including Germany, Spain, and England are finding that their recent “green energy” experiments are proving too costly to continue. Between 2005—when the European Union adopted its emissions trading scheme—and 2014, residential electricity rates in the EU increased by an average of 63 percent. In Germany, rates increased by 78 percent; in Spain, by 111 percent; and, in the U.K., by a whopping 133 percent. Over the same decade, residential rates in the United States rose only 32 percent.The true economic costs and bizarre outcomes are now emerging:
Across Europe, the cost of electricity has been rising, thanks to a well-intentioned but mistaken plunge into “renewable energy.” And what’s happening in the EU portends a troubling lesson for the United States. Simply put, green energy is proving to be an expensive failure. Yes, green energy works when heavily subsidized by the taxpayer. But Europe’s taxpayers can no longer afford the experiment.
What did our European friends get for their exercise in green energy exploration? Power shortages, job loss, and the bankruptcy of major green energy giants like Spain’s Abengoa, which received more than $2 billion in loan subsidies from the Obama Administration. In fact, Spain is now confronting $27 billion in debt from failed wind and solar projects, thanks to a program estimated to have eliminated at least two jobs for every “green” job it created. . . .(W)ind and solar will always require back-up power from gas, coal, and nuclear plants. That’s because the wind doesn’t always blow and the sun doesn’t always shine. Second, renewables are expensive, because they require standby support from gas, coal, and nuclear. Third, any effort to rely on renewable energy as the primary source of power is simply not feasible.We told you so--and it gives us no pleasure to say it. We have always hated waste. The old adage from childhood keeps ringing in our ears: "Waste not, want not."
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