Saturday, August 7, 2010

Government Energy Subsidies: Poor Paying the Rich

If you've read my blog more than once or twice, you'll know that I oppose wind and solar power subsidies based on the fact that they do not generate electricity consistently or cheaply enough to be considered an 'alternative' energy source. Moreover, I do not believe that increasing the amount of electricity generated from wind farms will significantly reduce carbon dioxide emissions since the intermittent nature of wind power requires fossil fueled generators to be running on 'standby' and because it holds the potential to de-rate or shut down nuclear reactors if the instability becomes too great. (When the nuclear reactors are shut down it will require greater amounts of fossil fueled generators to be used)

Those facts aside, we should not be using government monies to subsidize wind and solar projects for a different social reason.

A great deal of attention has been paid to the growing gap between the rich and the poor, even before the latest financial crisis. One question has been, what is fueling this growing gap? In my opinion, as the saying goes, you need money to make money. If you are rich, you have money to invest to earn more money. If you are poor, you have no money to invest and can only make money directly through an exchange of labour for money (ie by working). But if I may add to that saying, you need money and opportunity.

The Ontario government solar power subsidies were a huge opportunity for those with money to make more money. The government even admits now, that based on their original subsidy rates, the profit margins were in the range of 25-30%. Even the revised subsidy rates still leave the profit margins around 10%. Without the subsidies, building these solar energy projects would leave investors losing money hand over fist.

How much money do you make if you put your money in the bank? In mutual funds? In the stock market? Do you think you're making the equivalent of a 10% profit margin? Probably not.

There is a reason that even Conservatives like Rahim Jaffer were getting into the 'green energy' business.

Those with money, opportunity and the connections are going to be laughing their way to the bank with their profits courtesy of the Ontario taxpayer, thanking their lucky stars to have been at the right place at the right time. Meanwhile, the average worker will have the good fortune to be paying increased electricity rates in order to line the pockets of the fat cats on Bay street.

Perhaps they should send the Ontario government a thank you note in the form of a pink slip next election.

Tuesday, August 3, 2010

Wind Power's Problems Not PR

If you read the Toronto Star recently, you might think that wind power's only problem is unreasonable health concerns, and a minor case of NIMBY.

I'm still undecided about the health effects of wind power, to be honest. I can't see any reason why they might cause health problems, but I'm not willing to dismiss the idea out of hand without any widespread implementation and observation. I'm pretty sure though that in 20 years or so we'll have enough samples for some researchers to make a study examining health and proximity to large commercial wind farms.

But that is not wind power's main problems. The problems facing wind power are dual; its too expensive and too intermittent. Problems that have been largely papered over by the wind power lobby and have not been brought to the public's attention.

Other nations and jurisdictions, such as Scotland and Spain, are finding out the hard way that wind power is no alternative to coal or natural gas. Both in terms of electricity generated and in terms of cost per unit output.

Monday, August 2, 2010

Ignatieff and Wedge Politics

People often criticize Harper for excessive partisanship, and while that may be true, I'm unwilling to accept that as a criticism from Liberals and Ignatieff supporters. Principally because the Liberals have attempted to turn every issue into an attack on Harper in one way or another.

His criticism of Harper and the nuclear industry illustrate this more clearly than most:

Michael Ignatieff says the Conservative government has "walked away" from Canada's nuclear sector, leading to problems such as the delays and cost overruns with the refurbishment project at the Point Lepreau nuclear plant.

This logic is beyond my understanding. How Harper is responsible for poor management and the technical problems surrounding the Point Lepreau refurbishment is not clearly explained in the article but I'd be really curious to see a reporter press him on how exactly that is.

He tries to argue that "we need to make sure that we have nuclear technologies and capabilities and the capacity to repair our nuclear stations", but this is irrelevant to the situation. The technical problems surrounding the Chalk River shutdown and repairs nor the Point Lepreau refurbishment were not a result of the lack of government monies. Repairing the Chalk River reactor required using techniques that AECL has never used before and that required extensive training and preparation. Point Lepreau's scheduling disaster was a failure management-wise to properly project overall costs and scheduling and to account for technical problems that arose.

Ignatieff goes on to say that "if we're having problems with that refurbishment, the ultimate responsibility for that is not with AECL, it's ultimately with the Conservative government."

First of all, was anyone accusing Chretien of being responsible for the Pickering A refurbishment when it went late and far over budget? If they did, then the accusations were as much baloney then as they are now.

He's right about one thing however, the government is the shareholder of AECL and does have some responsibility for its failures. And as the shareholder, the government has decided to absolve its responsibility for AECL by selling it. For the government, its not hard to see why this is an attractive option.