The $0.02/kwh Production Tax Credit (PTC) is something Senator Grassley pushed through sixteen years ago. I had a short chat with him about this a few weeks back and he said basically that revenue is the problem. That PTC is dollars that could be coming in and if they're not they're taxing something else somewhere else at a higher rate.

I've been doing a bit of analysis on this recently and I think that I like the PTC as it is, but for the things we're doing I'm not all that concerned for specifically our projects if it happens to drop. There is a systemic concern that wind turbine makers will drop like flies, but I'm hoping a weak dollar keeps them rolling with the product going overseas - would serve us right for being so shortsighted.

Anyway, here is why I'm not so tuned up about that lapsing.

If I want to put in a large service here, with large being more than 50kw, I pay a $150/month Transmission and Distribution charge (T&D). The actual electric cost is $0.041/kwh but I also have to pay the local coop to maintain the electric network. They watch for your highest usage in the peak hours and in the nonpeak hours, charging $9.0/kw for what you use peak and $4.50/kw for what you use off peak. Note that this is per peak kilowatts used, not kilowatt hours - they take your highest fifteen minute interval for the month.

Lets say we're building an ammonia plant running on electricity that needs 50mw continuously:

50,000kw x $9.00/kw = $450,000
50,000kw x $4.50/kw = $225,000
50,000kw x $0.041/kwh = $2,050,000

Total rate for electricity? $0.0545/kwh. So ... T&D is $0.0135 ... and if you can build a system that doesn't care about the variable rate of electric production you're free of the T&D charge except for your own internal T&D cost, but it isn't that much to build the 34.5kv lines to transport the native voltage coming off a modern wind turbine.

A 2.0mw turbine will yield 660kw continuously here and cost about $1.5/watt. Assuming a ten year life you get about fifty eight million kilowatt hours out of the machine for its three million dollar price tag - a cost of $0.0519 per kwh. Now modern turbines, they last about twice that long ... $0.0259 per kwh.

Wind energy without a grid connection is competitive with hydroelectric. There are some policy issues with this, to be sure, but the renewable energy industry today basically stands where MCI was in 1983 - ready to start bypassing a monopoly network that is necessarily procedurally slow to accept new inputs. I don't think anyone else has noticed this, but my as yet to be indicted co-conspirators at the Stranded Wind Initiative are busy with patent applications for processes that make industrial chemicals using electricity and they specifically don't mind the variable nature of wind energy inputs.

I think the world is going to be an awful mess but maybe we can make corn country a survivable enclave. Each morning I get up, wrap that messenger line around my waist, and fling myself into the void, looking for a way to get us across that whole Olduvai Gorge thing. Setting aside the frightful things coming at us I must say I've never had so much fun running a startup operation before :-)

Welfare programs are not the answer for renewables. Lets end the subsidizes on non-renewable energy sources and level the playing field.

Todd