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03/17/2010

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RPS resources are often triply subsidized, concealing their economics. First, the RPS requires the supplier to acquire the resource. Sometimes, there is a cost limitation in the law, sometimes not. The cost gets spread to customers. Second, the government (state and federal) offer subsidies, including tax credits, that hide the true cost of the resource. For wind, in some places, that pays half the capital cost. And third, RPS resources often require extra transmission, as they are located off historical transmission paths. Transmission costs are usually spread to all customers and rarely tied to a specific resource causing the new transmission build.
Nearly all RPS resources have been wind, which is unpredictable and variable, causing havoc in control centers. Wind might be more economic if coupled with load control strategies through "smart grid" technologies. Either the wind supplier or the system operator could buy load reduction (e.g., water heaters, commercial HVAC systems, residential AC) that would moment to moment, or day to day, balance the variability of the wind.

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