Follow the money

Dr. Robert M. Gresham, Contributing Editor | TLT Lubrication Fundamentals August 2010

What happens when national energy policy clashes with the reality of engineering science? Check your wallet for the answer.
 


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KEY CONCEPTS
• Wind farms in the U.K. are highly government subsidized. As a result, the government pays a so-called, “renewable obligation.”
• The going rate for electricity around the country is on the order of 10 cents a kilowatt hour.
• Unless we tribologists can pull a rabbit out of a hat pretty soon, new wind turbines will incur high maintenance costs.

From time to time I and others have written about the technical problems besetting the wind turbine industry. In the short term, wind turbines have been a boost to our industry in the way of funded research into how to manage these problems. Our friends at ASME have a new technical committee, and STLE will form either a new industry council or technical committee focusing on the technology. In addition, the Society of Maintenance and Reliability Professionals is interested in the condition monitoring problems associated with wind turbines. So the technical community is clearly ramping up, thanks to your tax dollars.

Now I’ve been accused of being a troglodyte, curmudgeon, grumpy old man or, at the very least, benignly cynical. All are likely true, especially when one thinks of politicians as they intermingle with the economics of science and technology. So when someone suggests politics or politicians being involved, I immediately resort to the cliché, “Follow the Money!” 

Let’s start with the United Kingdom’s experience, since Europe seems to be a little ahead of the U. S. in wind energy. Many of their wind farms are located in the Cambrian Mountains, a pretty windy place and remote as well. It seems the debate in the U.K. over the efficacy of wind farms, as in the U.S., is not without a certain hyperbole on both sides, and the claims seem to border on the ridiculous. For example, a spokesman from Renewables U. K., says, “The U.K. is the windiest country in Europe, so much so that we could power the country several times over using this free fuel.”

He further claims that existing wind turbines have “the capacity to prevent 3.7 million tonnes of carbon dioxide per annum.” However, on closer inspection, to do this the wind turbines would have to generate electricity at 100% capacity, 100% of the time. Of course, the wind does not blow 100% of the time. Further, commercial wind turbines need about 6-10 mph wind to operate and automatically stop at 55 mph to protect the equipment. When wind is in this outlet range, electricity is not constant. According to U.K. government figures, wind turbines operate at only 27% of capacity.


Many people believe wind turbines will despoil the aesthetics of areas like Nantucket Sound.

That wouldn’t be so bad if we could store electricity, but of course we can’t. Thus, you have to either install many more turbines or have standby alternative generating capacity—like a fossil fuel or nuclear power plant. Germany, which has the largest number of wind turbines in Europe, is building five new coal power stations, which it does not otherwise need, purely to cover the power fluctuations from its wind farms.

When you follow the money, what you find is that in the U.K. wind farms are highly government subsidized. The government pays a so-called, “renewable obligation” (RO). The cheapest way to collect the RO is to build a wind farm. The way it works out, it costs about £2 million to build a wind turbine. The RO is about £138,000 annually, and with sales of the generated electricity added an industrious wind farmer can clear about £300,000. That’s about a 6-7 year payback, not bad. However, in essentially double that time, you can still get your money back without selling a single spark of power. That’s a pretty good low-risk deal, unless you’re a taxpayer.

Recently, after 10 years of negative lobbying by the presumed liberals of New England, the U.S. government approved the Cape Wind project in Massachusetts. The idea for this project, you’ll recall, was to install a huge wind farm in Nantucket Sound, playground to a large number of sea-oriented folks, some of whom live in Hyannis Port. Their opposition was primarily based on aesthetics, or lack thereof, and some notions about negative environmental impact on the ecosystem, hazards to sailors, shipping and the like.

For the pro-wind people, this project makes a lot of sense, as the farm is going to be in a windy place with a relatively shallow ocean bed and a relatively high density of people (which reduces transmission distance and cost) and who, theoretically, should be more culturally predisposed to such a solution. However, the debate quickly turned into a case of it’s OK in your backyard but not mine. Alas, but follow the money.

According to a May Wall Street Journal article, construction of the Cape Wind project is massively subsidized by the federal government. This, of course, means that not only will New Englanders’ taxes rise but so will mine and yours. But, hey, we’re all good guys.

But that’s not all.

The going rate for electricity around the country is on the order of 10 cents a kilowatt hour. Apparently, Cape Wind folks have asked the state for a 15-year contract at ~20 cents a kilowatt hour with a 3.5% escalation clause. In other words, not only will New Englanders’ taxes rise, but the cost of electricity, at least from this source, will essentially double. Add to that is the problem that has STLE all abuzz these days—premature failure of wind turbine gearboxes and some key bearing systems. Unless we tribological types can pull a rabbit out of a hat pretty soon, these brand new wind turbines are likely to incur high maintenance costs as well.

So, as the folks of Nantucket, Hyannis Port and Martha’s Vineyard are sitting on their verandas and yachts, sipping Chablis, eating brie and watching their new windmills going round and round, they can contemplate the fact that they paid extra to build them, are required to buy the product (electricity) and must pay about double the normal price for the privilege. Further, they can only hope that we tribologists, design engineers, fabricators and operators can fix the technical problems soon or else their costs will climb disproportionately higher yet. When you follow the money, it’s kind of a lousy deal.

But in keeping with my curmudgeonliness, let’s look at a current energy-related crisis and see what happens when we follow the money again. Of course, I’m referring the BP deep-water oil spill—a tragedy by any and all standards. Let’s say we, as a nation, take the approach we did with nuclear power. We also had serious problems at Three Mile Island, followed not long after by Chernobyl. These two catastrophic events made us very adverse to risk in the nuclear power industry in the U.S. So rather than deal with the problem, we quit building nuclear power plants and became all the more dependant on fossil fuels as an energy source for electrical power, further diverting fossil fuels from other applications.

France on the other hand continued with nuclear power development and, with no major negative events, now derive about 85% of its electricity from nuclear power. To that extent, France is that much less dependant on foreign oil.

What if, after the BP oil spill crisis is over or at least mitigated, we continue to ban most offshore oil drilling, both deep water and shallow? What if we raise taxes on oil suppliers to raise so-called “trust funds” to mitigate possible future risk or spills? What if we excessively tighten the regulatory environment to near punitive levels? What if several of these companies crumble and go into bankruptcy or just leave the country?

We will be even more dependant on foreign oil, and prices will significantly rise. And it is not just gasoline prices that will rise but also the myriad of other products that are derived ultimately from crude oil such as plastics, synthetic fibers for clothes, furnishings and a wide variety of additives that go into foods, paints, fertilizers, detergents, cosmetics, packaging, drugs—the list is almost endless.

If this happens our friends in Nantucket Sound might feel a little smug. Their 20 cents-plus-per-kilowatt hour electricity might suddenly seem like a bargain instead of a lousy deal.

If you feel like you need a crystal ball to sort all this out, just remember one rule—follow the money.
 

Bob Gresham is STLE’s director of professional development. You can reach him at rgresham@stle.org.