Not tring to get political on you Ed but thought this was an interesting take on things.
We've been paying 6-7 cents/kw the last 6 months, been under a dime for over a year.
Green energy bubbles
Terence Corcoran, Financial Post
That eerie hissing you hear may well be the air beginning to seep out of the green energy bubble. The sound is similar to the pfffffft and sshhhhsssssp noises we heard in the early days of the dot.combubble collapse or the subprime mortgage meltdown. If you can't hear it, you are not alone. While investment analysts are telling their clients to get out of solar power firms and warning about the continuing risks in wind and bioenergy schemes, Ottawa and the provinces are on a mad populist stampede to throw billions of dollars at the green energy monster. The politicians don't seem to be keeping up with the trends. "Don't try to catch a falling knife," warned J.P. Morgan this week in a report that told investors the market continues to fall out of the solar panel module market. It downgraded a bunch of solar companies that have already been in a tailspin since the fist signs of a solar crash back in 2008.
Other alternative energy sectors are hitting walls. Jurisdictions with wind power regimes face continuing issues related to the fact that the wind often doesn't blow much, turning investments in wind farms into cash-draining albatrosses. In Ontario, the 1,100 megawatts of built wind turbine capacity are often running a few megawatts at a time, and even on the best of days have trouble producing 150 megawatts.
Despite the fundamental lack of economic justification for alternative energy, governments keep pumping air into the bubbles. They blew a small fortune on ethanol programs that didn't quite work out, so now they're betting vast sums on aggressive campaigns to create green industries using some of the most regressive interventionist methods known to economics.
Subsidies, trade protectionism, market-distorting prices, back-door tax hikes, carbon taxes, massive regulation, big secret deals with rent seeking corporations, cross subsidies from one industry to another -- no policy option is too crazy for green energy. The Liberal government of Ontario Premier Dalton McGuinty has already billed itself as possibly the greenest energy jurisdiction in the world, a claim that seems plausible given the IMAX scale of its economy-distorting Green Energy Act.
Ontario's main claim to power fame is a "feed-in-tariff " scheme under which the province will force power into the market at subsidized rates. Under the act, power distributors are obliged to pay 44 ¢ a kilowatt hour for solar power, 13.5¢ for wind power and up to 80¢ for solar power delivered from rooftop systems. Loblaw, the grocery store chain, yesterday become one of the first companies to agree to accept the 80¢ subsidy for power from solar panels installed on the roofs of its stores. The cost of that 80¢ power will be borne by all electricity consumers in higher rates.
And now B.C. Premier Gordon Campbell is reportedly angling to topple Ontario for the greenest-of-them-all title. "There is not a jurisdiction that won't try to win the clean energy race," said Mr. Campbell. He promises to fast track alternative energy projects. The province's B.C. Hydro monopoly is expected to announce new energy purchase agreements sometime this month. One of them is with a group headed by GE Energy Financial Services to revive the controversial Upper Toba Valley Hydroelectric Project. That project remains shrouded in financial mystery.
While British Columbia's purchase-agreements are not quite feed-in-tariff structures, the economic reality is that green energy tends to cost more and the higher costs will be borne by all consumers. None of these technologies -- solar, wind, bioenergy -- are economical on their own in competition with natural gas or coal -- or even nuclear. At 80¢ a kilowatt hour, Ontario could theoretically be better off building a dozen new nuclear plants.
Needless to say, all this is being driven by the fantasy of reducing and even eliminating carbon emissions so as to save the planet from global warming. Leaving aside the growing probability that global warming science will prove to have been a false alarm, little or no work has been done on whether any of the alternative energy spending will reduce carbon emissions. Ontario has yet to produce any evidence that its massive feed-in-tariff regime will appreciably reduce carbon emissions, even though consumers will pay billions of dollars more for electricity in years to come.
Internationally, the alt-energy movement has taken on bubble qualities. The solar report by J.P. Morgan documents the rise and fall of a half dozen companies that are now trading at a fraction of their market highs (see two examples below). Solar panel prices plunged last year and appear to be heading lower still this year. Stock prices, already battered, could go lower. "We believe significant downside risk remains even from these levels and continue to be wary." Making money in solar is still a problem. ENER has annual revenue of $367-million, but lost $1.54 a share. Evergreen lost $21-million on $74-million in revenue
The dot. comish quality of the solar industry is obvious. Even worse from an economic perspective are the perverse government policies driving the market. Ontario insists on local content in solar and wind equipment, thus guaranteeing rate payers will pay high prices for equipment that is available on the open market at deep discounts.
Even more perverse economically is that the subsidies for alternative energy come on top of other carbon-reducing programs. Programs such as carbon taxes in British Columbia and smart meters in Ontario compound the cost burden on consumers. If cap and trade were to be thrown on top of the green energy programs and existing taxes, the irrationality of the green energy system would become even greater.
Maybe the hissing sound of deflating bubbles will eventually shake up the politicians and consumers. The worst is yet to come.
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