Are NRG’s Layoffs a Harbinger of Wind Power’s Viability?

by Robert Maynard

The recent layoff of 18 workers by NRG Systems raises the question of the viability of wind power in the absence of government favors and subsidies.  As the free Press article points out, the company claims that the layoffs are a result of  “ongoing uncertainty and volatility” in the global wind industry.  The problem is that the uncertainly surrounding the global wind industry is more than a mere economic slowdown:

In the statement, NRG said the wind industry is being hampered by external sources, including the “looming expiration” of the Production Tax Credit for wind, which expires at the end of the year unless Congress acts to renew it.

Rep. Peter Welch, D-Vt., argued for the extension of the tax credit through 2016 before the House Ways and Means Committee in late April. Welch said that every day Congress allows the extension of the credit to “hang in limbo” costs the country investments in renewable energy, along with “our place in the competitive global market and the creation of new green jobs.”

Welch cited the work of NRG in his testimony, saying the company has reported a 50 percent drop in U.S. orders because of the uncertainty facing the tax credit. NRG makes wind measurement systems for electric utilities, wind farm developers, research institutes and others.

The fact that “renewable” sources of energy/power are not viable in the market place without being propped up by government is not a new phenomenon.  After the Three Mile Island meltdown of the uranium core on March 28 1979 in Pennsylvania, most of the opinion makers agreed that this marked the end civilian nuclear power in the United States. This conclusion was reached despite the fact that the TMI containment vessel had done its job and prevented any significant release of radioactivity. The claimed answer to our energy needs was going to efficiency and the use of renewable sources of power.

This led to a government backed crusade to support such sources of power.  The question is “how did that crusade turn out?”  In their book “The Bottomless Well”, Peter Huber and Mark Mills give us an answer to that question. A quick look at the charts of the growth of energy sources used to power the U.S. electrical grid displayed in the the book’s preface shows decisively that renewables have drastically failed to contribute much to our energy needs. During the period from 1979 to 2003, despite the hype and government subsidies. About 0.013 percent of the U.S. total electrical consumption was produced by solar. Wind power contributed about 0.27 percent. There were subsidies, tax breaks, and government-funded research, but most of the private capital pursued conventional fuel. Fossil and nuclear fuels still completely dominate energy supply in the United States, just as they do in most industrialized nations. Nor does it look very realistic that this is going to change anytime soon. In short, so-called renewable sources of energy are not competitive in the market despite all the help that they get from the government.

To make things even worse for such companies in that industry, the government gravy train is running out and NRG systems is not the only one feeling the pinch.  A recent article titled “Wheels Coming Off Wind Energy Gravy Train” and posted on the Family Security Matters website notes the following:

The wind energy industry has been having a hard time. The taxpayer funding that has kept it alive for the last twenty years is coming to an end, and those promoting the industry are panicking.

Perhaps this current wave started when one of Big Wind’s most noted supporters, T. Boone Pickens, said in an MSNBC interview, “I’m in the wind business I lost my ass in the business.” But the industry’s fortunes didn’t get any better when the Wall Street Journal wrote an editorial titled, “Gouged by the wind,” in which they stated: “With natural gases not far from $2 per million BTU, the competitiveness of wind power is highly suspect.” Citing a study on renewable energy mandates, the WSJ noted that states with renewable energy mandates “paid 31.9% more for electricity than states without them.”

A comprehensive article in the Financial Times concluded that the “US renewables boom could turn into a bust,” the enthusiasm for renewables “could fizzle out,” the US wind industry is stalling and may go into reverse,” and “governments all over the world have been curbing support for renewable energy.”

Michael Liebreich of the research firm Bloomberg New Energy Finance says, “With a financially stressed electorate, it’s really hard to go to them and say: ‘Gas is cheap, but we’ve decided to build wind farms for no good reason that we can articulate.'” Christopher Blansett, alternative-energy sector analyst for the Best on the Street survey, says, “People want cheap energy. They don’t necessarily want clean energy.”

As the Financial Times reports, time-limited subsidy programs “face an uphill battle.” The biggest US program set to expire this year is the production tax credit (PTC) for onshore wind power, which “is the most important factor behind the fourfold expansion of US wind generation since 2006.” Four recent attempts in Congress to extend it have failed.”

Given the lack of viability of  these sources of “renewable” energy, Representative’s Welch’s argument that failure to invest in them endangers “our place in the competitive global market and the creation of new green jobs,” rings a bit hollow.  In fact, as True North Reports pointed out in a February 2011 article titled “The Blind Leading the Blind,”  Spain has already done a comprehensive study on the “path of green jobs as a means of economic expansion” and came up with the following conclusion:

“Europe’s current policy and strategy for supporting the so-called “green jobs” or renewable energy dates back to 1997, and has become one of the principal justifications for U.S. “green jobs” proposals. Yet an examination of Europe’s experience reveals these policies to be terribly economically counterproductive.

This study is important for several reasons. First is that the Spanish experience is considered a leading example to be followed by many policy advocates and politicians. This study marks the very first time a critical analysis of the actual performance and impact has been made. Most important, it demonstrates that the Spanish/EU-style “green jobs” agenda now being promoted in the U.S. in fact destroys jobs, detailing this in terms of jobs destroyed per job created and the net destruction per installed MW.”

More specifically:

“Optimistically treating European Commission partially funded data1, we find that for every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.”

Vermont itself has already engaged in enough government directed efforts to tip the scales in favor of wind energy in general and NRG Systems’ founder David Bilttersdorf in particular.  As pointed out during the 2012 campaign season by then True North Radio Host Rob Roper, an $8000 donation to Peter Shumlin by Bilttersdorf was in close proximity to Shumlin’s appointment of Bilttersdorf to the Clean Energy Development Board, and Bilttersdorf’s company ultimately receiving $4.3 million tax credits from that very board.  And, according to the Rutland Herald, “Companies founded by, and linked to, Burlington renewable energy developer David Blittersdorf received $4.3 million in tax credits for solar projects across Vermont. The total pool of available tax credits was about $7 million.”

Nor are subsidies, tax breaks and sicking VPIRG on their competitors like Vermont Yankee the only favor that Vermont’s political class performs for its paymasters from “big wind”.  According to a piece by Willem Post titled “Government Noise Codes“:

In Vermont, codes require nighttime noise levels not to exceed 40 dB(A) as measured at the exterior of a dwelling facade and averaged over a 12-month exposure, the same as the recommendations of the 2009 World Health Organization report that mostly cover road noise, air traffic, and community noise and do not mention wind turbine noise. LFN and infrasound are not covered. The Vermont code is hopelessly out of date and does not protect the public health, safety and welfare; it is a wind turbine vendor’s dream come true.

Isn’t about time that we say no to yet more special treatment for wind company interests?  Vermont’s electric power rate payers cannot not afford such expensive favors to an industry that appears to be unable to survive in the absence of government favors.

 

 

One thought on “Are NRG’s Layoffs a Harbinger of Wind Power’s Viability?

  1. Wind energy is an American success story that kept 75,000 people working through the recession.

    It’s created 35% of all new electric generating capacity in the country the past 5 years, right behind natural gas.

    Utilities are locking in long-term contracts for wind because it helps keep consumers’ electric rates low and hedges against volatile prices for natural gas (which has many incentives of its own, like all energy sources).

    Oregon and Massachusetts public health agencies both recently reviewed all the scientific evidence regarding the sound of wind turbines and cleared them of any health effects.

    Wind power is American ingenuity and entrepreneurship at work. It has created one of the fastest-growing manufacturing sectors in the country, driving costs down and driving domestic content up to 60%.

    Vermont can be proud of companies like NRG Systems. But those jobs and up to $20 billion-a-year in private investment are now at risk to an expiring tax credit that far more than pays for itself.

    Don’t abandon them to a gridlocked Congress. Supporters of wind energy and good jobs in Vermont and across the country can weigh in at http://www.saveusawindjobs.com

    Let wind energy finish the job of creating a new U.S. energy sector.

    Peter Kelley
    American Wind Energy Association

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