With luck, I'll be returning to normality after the hiatus of the last two weeks. As a warm-up, here's a pop at a renewable energy developer, one we've encountered
before. FPL and Bill Clinton got together to produce a whole lot of dubious PR.
I'll be clear right now - there's an implicit bargain in these announcements - and it's probably broadly for the best that they go forward. Clinton gives you a room full of starstruck reporters, and you get to work it if your stunt has concrete enough foundations.
Thus, in one of the other announcements today, Standard Chartered promises to do more lending to renewable energy projects in emerging markets, something they're already a leader in. Or take
Vinod Khosla's promise to build more ethanol projects, a venture in which he does not lack for antecedents (his main innovation is to build them slightly nearer consumers).
FPL's move is a little more startling, in that involves a decent-sized commitment to build a huge 500MW
solar thermal power project in Florida. It won't be first (several US and Spanish developers are way ahead), and it won't build the 500MW all at once, and the headline investment of $1.5 billion will be met in part from the coffers of its faithful banks.
Its partner, Ausra, claims that the prices of solar thermal power will eventually be competitive with coal-fired power, which may be true, but since you're comparing a technology with high upfront construction costs and low operating costs with a something that's slightly cheaper to build and slightly more expensive to operate, is a difficult one to prove, especially when the comparison involves fuel and financing costs many years in the future.
The issue I have, as ever, is with the proponents' inability to hip us to their dependence on the flow from the public teat. From page two of
this Reuters article comes a claim that the transition to a low-carbon future will be achieved through the will of the market, a mechanism dear to the heart of
the ex-PrezThese power plants will provide validation to the wider world electric market that a transition to zero-carbon electric power generation can be made without massive subsidies or negative impacts on economies," the Clinton Global Initiative document said.I couldn't find the document that Reuters referred to on the CGI website, although maybe I'm in too much of a rush to get back out there. But it's still a little bit strange to describe as "without massive subsidies" a project that will, at the very least, benefit from favourable depreciation for tax purposes, as well as the production tax credit, provided it can get in service in time to benefit. A tax subsidy, after all, is still a subsidy, albeit one applied in an even less arbitrary fashion than a direct subsidy. Be interesting to know whether Ausra would come to the same conclusion on cost comparisons with coal on a pre-tax basis.
For more on this argument, see the discussion I had in
this set of comments.
The other half of this Clinton-friendly announcement was that FPL would take steps to educate the consumer on how its energy use might contribute to climate change. There are good odds that it won't be through a feed-in tariff, a transparent way of passing on the higher cost of renewable power to the consumer.
Michigan just proposed one. But such a mechanism would not favour a large profitable utility like FPL the way the current system does.
