Coauthored with John Nichols
Delaware’s political establishment thinks First State electricity consumers should subsidize the manufacturing of super-sized fuel cells, under the auspices of California-based Bloom Energy, to replace natural gas and coal-fired power plants in generating electricity.
The politicos want to build a factory in Newark, where rail service is available to ship Bloom’s 10-ton, 100-kilowatt, “eco-friendly” Energy Servers to presumed eager buyers across America.
Bloom claims its “revolutionary new design” and “breakthroughs in materials science” make its new solid oxide fuel cell (SOFC) technology “clean, reliable and affordable.” Governor Jack Markell, Department of Natural Resources Secretary Colin O’Mara, Department of Economic Development Secretary Alan Levin and assorted legislators insist their plan will create jobs and put Delaware at the forefront of the Green Revolution.
If that’s the case, and if Bloom had a viable business plan, investors would be clamoring to get in on the action. There would be no need to stick Delaware ratepayers with a bloomin’ tariff (“green premium”) that will add at least $600,000,000 to household and business electricity bills over the next 20 years – above what they would pay for electricity generated by combined cycle natural gas plants. There would be no need for the Economic Development Department to contribute another $16,000,000 in startup costs.
Actually, the green premium could be much higher – based on a 2016 “levelized cost” of $215 per megawatt hour for the fuel cell tariff versus $66 for combined-cycle natural gas generators. The $149 difference times 5,200,000 MWh from fuel cells is $774,800,000!
Tariff proponents will likely argue that this cost must be reduced by $426,000,000 in renewable energy certificates (ie, energy taxes) that Delmarva Power is required to purchase under Delaware’s Renewable Portfolio Standards Act. However, this just means the same families and businesses must pay the bill in two ways: as taxpayers and as electricity ratepayers.
In other words, Free State families and businesses will be “free” to pay an extra $600,000,000 to $775,000,000 in any combination of taxes and tariffs they “choose” – for the “privilege” of being able to say part of their electricity comes in a greed or greenbacks shade of green.
Those higher electricity costs translate into higher prices for goods and services. They pull money out of productive sectors of the economy and transfer it to politically connected operators and campaign contributors. In the process, they destroy traditional jobs – as they did in Spain and Scotland, where overpriced “green” energy killed 2.2 to 3.7 jobs for every “green job” created.
Bloom also expects to receive a substantial US Department of Energy grant, if it can get swift approval of the Delaware tariff. That federal grant will come from borrowed money, in the midst of an economic and budgetary crisis, and in the wake of scandalous green energy bankruptcies.
This crony capitalism means Bloom Energy gets risk-free cash, so that it can proceed with an initial public stock offering. As a privately held company, it gets to keep its finances a secret, even as it gets millions in taxpayer aid, with little or no transparency or due diligence in assessing the financial arrangements. That means US and Delaware taxpayers are forced to take another big risk, while families and businesses must pay well above market rates for electricity.
This sweetheart deal is shocking in its audacity. But then, as Green Tech Media reports, “Bloom plays the subsidy game like a pro, receiving more than $218 million in subsidies in 2010 from California’s [Self Generation Incentive Program].” It gets worse.
This time around, Bloom persuaded the Delaware legislature to enact a special provision. If any future legislature ever modifies the Bloom tariff, the company will receive a lump-sum payment of the entire 20-year tariff, which Delmarva Power, meantime, will tack onto all ratepayers’ utility bills. Without this guarantee, Bloom would have a hard time peddling its IPO.
It’s equally amazing that Bloom can even qualify for renewable energy subsidies. For that it can thank the Delaware legislature, which adopted Markell and O’Mara’s expanded definition of renewable energy, to include Bloom’s natural gas-fueled SOFC Energy Servers.
They pulled this off by enabling only Bloom fuel cells to qualify under the Renewable Portfolio Standard, originally intended for wind and solar facilities, by claiming Bloom’s equipment “could” run on biofuels, like methane from cows or landfills.
As to being clean and green, Bloom’s Energy Savers require substantial amounts of rare earth elements, like yttrium and cerium. Prices are soaring – by 500-2000% over the past twelve months, according to a recent General Electric report. The United States imports 100% of all the rare earths it uses in countless energy, military, electronics and other applications, with 97% coming from China.
Now the Chinese have restricted rare earth exports, and sell mostly finished products, often using our technology. Worst, the rare earths are mined, processed and turned into these products under health and environmental conditions that severely damage farmland, wildlife habitats, miners, and factory workers.
With the shale gas revolution driving natural gas prices down, there should be no need for fuel cells to replace gas-burning generators. With China and India building new coal-fired power plants every week, and emitting far more carbon dioxide than all our job-killing regulations and climate change initiatives can ever offset, even diehards like Al Gore cannot justify Bloom’s systems on global warming grounds.
Then there is Solyndra. One would think that scandalous debacle – $535 million in taxpayer cash blown in two years, and Solyndra executives now pleading Fifth Amendment rights against self-incrimination – would ensure at least a modicum of sanity, honesty, transparency, accountability, and reluctance to use more taxpayer and consumer dollars to benefit special interests. Apparently not, at least in Delaware and the US Energy Department.
On September 27-29, the Delaware Public Service Commission will conduct public comment sessions on Bloom Energy’s application for special treatment and subsidies. Every American who cares about our economy and unemployment, every citizen who is disgusted with our wasteful, crony-capitalist, bureaucrats-pick-losers system, can send comments to kevin.neilson@state.de.usand then let their elected officials know enough is enough.
That may help inoculate America against the risk of the California and Delaware “green disease” becoming an uncontrollable national Contagion. We need to stop these costly bloom-doggles!
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