Renewable Energy needs a healthy economy

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December 1, 2:12 PM

by John Ryden, Global Warming Examiner

 

Wind Farm

In this environment, there is no immediate need for new energy sources. Low prices are causing renewable energy projects to be put on hold or even outright cancelled. Lower energy prices cause projections of future revenue from renewable energy projects to drop. Some projects now don’t have the future cash flow to cover the financial cost of the project, even with federal subsidies.

Low natural gas prices are causing wind projects to be put on hold. If you can’t build coal fired power plants because of the fear that environmental restrictions will not allow you to recover the cost, then the next cheapest source of fuel for electric power plants is natural gas. The cost for natural gas has fallen so low, about $6.50 per MMBtu, that wind power is no longer competitive. This might be a temporary low, but it affects the price that utilities are willing to pay for marginal electric power.

Wind power also has the problem that it requires a huge investment in electric transmission infrastructure for large scale wind power to be effective. States that would fund this type of infrastructure projects are being squeezed by the economic downturn and are looking for ways to cut spending in the short run.

Solar manufacturers have been watching orders for solar cells dry up in the current economic environment for the same reason that wind power projects are being cancelled or postponed.

Without demand from end-users, producers of wind systems and solar systems will stop adding to capacity and may even reduce their capacity to build these systems. Wind and solar power are only a small fraction (about 1%) of our energy production. To reduce carbon emissions into the atmosphere, we will need to greatly expand these sources of energy. Any reduction in the capacity to build these systems will only increase the time it will take to eventually replace our carbon fuel energy infrastructure.

What we need is a healthy economy to provide the money and the incentives to build renewable energy systems. Making our economy healthy is now a priority. We should remember that energy is an important part of our economy. Part of our economic problems today are the result of trying to import over 70% of our crude oil and paying for it with credit we can’t pay back. The $700 billion we were spending on imported oil has been reduced by the recession, but will come back if we don’t start spending on alternatives.

We should be developing all of our alternatives that are cleaner than coal. This includes domestic and off-shore oil drilling. This includes nuclear power. This includes substituting cleaner natural gas for oil by building natural gas powered cars and trucks.

When our economy is working efficiently, then the money will be available to fund renewable energy projects. If we fail to develop all of our cheaper and cleaner energy sources now, oil prices will surge as the world economy recovers. We will only find ourselves subject to terrible boom and bust cycles that will make it very difficult to develop renewable energy resources and lead to our continuing dependence on fossil fuels.

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