Two years ago to the date I took a trip from Seattle, WA to Reykjavik, Iceland as the airfare was next to nothing in order to promote tourism following the collapse of their banking system. After a long flight, bus ride and walk to the hotel it was time for a shower. Usually when traveling through Europe I have learned expect a subpar shower experience compared to American standards, this time was vastly different. I was greeted with an stunning shower and scolding hot water; had to wait a minute for the water to cool down before I could step in. My second thought after the relief of facing another European shower, was the compelling interest to learn about the cost of heating water to these extreme temperatures.
The next day I took an all day tour of the region with a small group of 15 people. Our first stop to my surprise was one of five geothermal plants on the island. This particular plant provided electricity, heat and hot water to the city Reykjavik at enormously low cost. Most unexpected though is the fact that the government, specifically the National Energy Authority, have been successfully running these facilities while providing effective research and development since the 1940s. Aside from higher taxes in Iceland why is America failing in the renewable energy department?
Americans are well aware of the recent fiasco with Solyndra, a designer, manufacturer and seller of solar photovoltaic systems. A sound entrepreneurial idea in the sunny state of California which the company was based out of. However, the business was unable to provide these services successfully and required a $535 million loan guarantee from the United States Energy Department. Keeping away from political discussion and strictly economical, how is that Solyndra was unable to run their company as a profitable organization? Potential state regulations could be the problem as California is ranked the worst ran state in the union.
On the other hand, the top ranked state North Dakota has been considered the Silicon Valley of the Midwest due to the successful oil boom in which zero government guaranteed loans have been issued. Moreover, small western towns in the state have dramatically changed for the better and worst over the last ten years.
"It has confounded kids running lemonade stands: 50 cents a cup but your customer has only hundreds in his payday wallet," (Chip Brown, NY Times, 31 Jan 13).Looking at the success seen in North Dakota one can wonder if innovative entrepreneurship is the difference here. Fracking was implemented to make the majority oil in the state economically feasible to produce. Even with these developments, oil must stay over $60 barrel or their profits will turn into a losses; forecasts do not predict oil to drop back down to these levels.
Overall, these are three separate examples have left us without any real answers. Icelandic government agencies have utilized their natural resources effectively to provide a lasting renewable energy source. California companies have been supplied with an abundant amount of sunshine yet have failed to turn a profit and cost the taxpayer through guaranteed loans. Lastly, North Dakota has proved to America once again that oil king in terms of profitable energy. Two questions remain:
- Would privatized geothermal energy been as successful in Iceland?
- How does America move towards profitable renewable energy?
Panels are too expensive, wind turbines are too expensive, adding thermal/wind/solar etc just drives heat rates down further making PPAs less economical for utilities. The issue is that you need outsized PPA prices, some sort of FIT program, or ITC/PTC type programs to keep building a renewable project profitable. The cheaper nat gas gets the less we need these things, and merchant renewables simply cant be financed.
If you want a standard wind or solar project to stand on its own profitably, you need grid prices to rise substantially, or project costs must come down. Until then, these types of projects will never be at true 'grid parity.'
Without subsidy you simply can't recover the capital costs in the US given prevailing wholesale electricity prices across the vast majority of renewable technologies so no (some onshore farms remain profitable in California but they had very low capex). However, with subsidies sure, just look at Germany etc in Europe.
+1 PTS
i heard hot water is a lot cheaper when you're sitting on a fucking volcano.
Iceland pisses me off. How about you pay us back that money we lent you? Pricks.
/rant.
Obviously, but do you think private corporations would have been as successful or would they have ended up like Solyndra? Granted I am, as most people here are, pro-capitalist, so how come the American entrepreneurial spirit has failed us in finding successful renewable energy or clean energy? I am not an environmentalist but I find the questions interesting from an economic standpoint. As someone mentioned above, it is currently an unprofitable endeavor but I am wondering what needs to be done in order to make it profitable?
You simply have to wait for either costs of renewables to come down or O&G prices to rise. Not sure what else you want people to do?
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