July 27, 2009

Making sauerKraut(s)

FROM- Future Pundit
Germans To Pay Much For Offshore Wind Power

Germany is phasing out nuclear power plants before the end of their useful lives, building more coal electric plants, and will make Germans pay thru the nose for expensive offshore wind electric power.

It was the revival of Kohl’s center-right Christian Democratic Union party under Chancellor Angela Merkel that delivered the concessions needed to kick-start the offshore-wind industry. In 2006 Merkel’s government—a coalition that also included the Social Democrats and the Christian Social Union—made power-grid operators responsible for running cables to offshore farms. That shaved about one-fifth off the average cost of a project. And last year Merkel improved the revenue side of the ledger, boosting the offshore tariff to 0.15/kWh (US $0.21/kWh).

The German government had to increase the payment to offshore wind operators in order to get enough investors to put up money to build offshore wind farms. Opposition to closer offshore facilities forced the wind farms into deeper water which drove up costs.

To put that 21 cents per kwh producers price in perspective at the time of this writing Americans on average are paying residential retail prices at 11.28 cents per kwh on average. The 21 cents per kwh that grid operators will pay will get marked up to higher residential retails prices to pay for distribution and billing costs.

But that cost number for wind electric is even worse than that. Wind is not dispatchable power. You can't order it up when you want it in response to demand spikes. You get it when the wind blows and you don't get it when the air is still. Electric power generators that can ramp up in response to demand spikes normally gets sold for a higher price than baseload power (like a nuclear power plant that runs all the time). But baseload power is at least there when the demand is greatest just like it is there when demand is least. By contrast, wind isn't as reliable as baseload power. So that 21 cents per kwh wholesale for an undependable power source is a really high price to pay.

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