March 11, 2013

Offshore wind: a valuable investment or a waste of money?

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By Ilana Kowarski
ilana@marylandreporter.com

Wind turbines off coast of Belgium (Photo by Luc Van Braekel)

Wind turbines off coast of Belgium (Photo by Luc Van Braekel)

The Maryland Senate gave its approval to offshore wind energy on Friday, but not before a heated debate questioning whether it is a wise decision for the state to subsidize and invest in the developing technology.

Proponents of HB 226 described it as a forward-looking law that would pave the way for energy independence and reduce the emission of greenhouse gases by capitalizing on an environmentally friendly source of electricity.  Opponents described the bill as “corporate welfare” and a boondoggle for taxpayers.

The bill passed 30-15 in the Senate and 86-48 in the House of Delegates last month. The measure, proposed by Gov. Martin O’Malley, now goes back the House to approve or reject the Senate amendments.

Supporters and opponents both referenced the analysis of the non-partisan Department of Legislative Services to bolster their arguments, quoting the department’s calculations differently depending on political perspective.  Offshore wind advocates said that the technology would cost each Maryland family $1.50 per month in additional electricity bills, and the policy’s detractors totaled these costs and said that Maryland citizens would pay $1.7 billion for 20 years of wind technology.

‘World’s most expensive energy’

Senate Minority Leader E.J. Pipkin opposed the bill in a speech that lasted over an hour.

Senate Republican Leader E.J. Pipkin opposes tax hikes in floor debate.

Senate Republican Leader E.J. Pipkin during floor debate.

“This is the dumbest idea ever,” Pipkin said.  “I supported onshore wind, so I’m not just the guy at the front of the room that says no to everything, but I will repeat, this is the dumbest idea ever… We’re not supposed to use the power of the state to benefit a tiny group of investors.  That’s the definition of corporate welfare.”

Pipkin said that very few companies had the expertise necessary to create offshore wind technology and that most of these companies were not American.  Therefore, the wind energy industry would create more jobs in Europe than in Maryland, Pipkin said, adding that he did not believe that the industry could provide the economic stimulus that Gov. Martin O’Malley has promised will occur if Maryland attracts renewable energy companies.

Pipkin warned that the governor risked creating an energy monopoly and argued that the proposed offshore wind subsidies were unprecedented in magnitude.

“Never in the history of Maryland have people paid so much for the benefit of so few,” Pipkin said.  “This is the world’s most expensive energy.”

Report: Cost will go down as technology develops

The Center for American Progress, a liberal policy group, disputed this argument in a Feb. 28 report called Making the Economic Case for Offshore Wind.

The report’s author Michael Conathan said that offshore wind was “a key means of diversifying and developing our domestic energy portfolio” and he said that the economic arguments against the technology are misleading.

“As with any new product or technology, the first U.S. offshore wind farm will undoubtedly face steeper costs for construction and development.  As industries develop, however, experience, technological developments, and economies of scale will cause those costs to decline,” Conathan wrote.  “Such is the case with everything from energy development to consumer electronic products – flat-screen televisions, for example.  The question is not, then, whether the cost of offshore wind energy will come down but rather how quickly.”

Conathan reminded his readers that the United States had given billions of dollars in subsidies to the emerging oil and natural gas industries, and he argued that it was not so farfetched to do the same for offshore wind.

Supporters said offshore wind is forward-thinking investment

Democrats in the Maryland Senate made a similar case for offshore wind, comparing the state’s investment in wind power to the American investment in the national space program.

Sen. James Mathias, a Democrat whose Lower Shore district includes Ocean City, said that he strongly supported the offshore wind legislation.

“I believe in the bill, and you know why?  Because this is a bill that looks forward,” Mathias said.  “I’m proud of this bill, and I’m going to vote for it, because I believe in the system.  When the country wanted a National Highway System, we as citizens had to pay, and when John Kennedy proposed a space program, we had to pay, and it was worth it.”

Sen.  Katherine Klausmeier, D-Baltimore County, expressed a similar sentiment in her speech.

She compared offshore wind technology to the New York subway system, arguing that both were critically important technologies that required state support.
“We’ve got to try this.  We’ve got to move forward,” Klausmeier said.

  • A colossal waste of money for taxpayers & utility customers ! I have suggestion…How about those who support this idea and those who hope to profit from building these things pony up the cash, not the taxpayers & utility customers ?
    After all, they should be able to get capital from venture capital firms since it’s such a great idea ! ( sarcasm )
    Just look at the track record of the existing “wind farms” out there… And let’s not forget Federal Government ” investments ” like Solyndra, etc.
    Wind power…unreliable, intermittent, ultimately wasteful… Just like O’Malley !
    Also, let’s not forget about the ” migrating birds ” that will be killed…

  • rbindc

    This project is politics at its worst! I’m a liberal democrat; I’m also an energy consultant that can vouch for the fact that any offshore wind project is going to produce energy at a price that is higher than most other renewable resourc and at least twice the cost of conventional gas-fired generation. The Cape Wind project in Massachusetts is a clear testament to that fact.

    If Maryland politicians want to create jobs (and they should) there are more efficient ways to do so through infrastructure projects. It’s not like the state can’t find worthy, shovel ready projects to invest in that create jobs as well as produce benefits that exceed the costs. Wind power is not one of them.

    To reveal just how corrupt this offshore wind project is consider that is a set-aside within the state’s renewable portfolio requirement, which itself is a set-aside! The proponents won’t even allow other renewables to compete with offshore wind out of fear that that some other renewable resource might be more cost-beneficial and nudge out offshore wind!

    So how much money did the offshore wind lobbyists contribute to the campaign coffers of Governor O’Malley and the legislators who supported this white elephant? Maryland electricity consumers deserve an answer so they can hold accountable the spendthrift politicians who voted in favor of offshore wind subsidies.