Wind power as extractive industry

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In business history, there are a few industries that especially stand out for their lack of interest in the welfare of their workers, the places where they work, or pretty much anything except the bottom line. Mining of all kinds is historically awful, as are oil and gas drilling. Related industries - refining, smelting, and electricity generation, aren't particularly beloved either. All of these can be called extractive industries, as they seek to get something out of one place and bring it to another place.

The basic problem with extractive industries is simple: they try to serve their customers, while making the most profit they can. Since the results of extractive industries are usually generic commodities, it's historically been hard to seek premium prices from customers for better quality or behavior. Profits need to come from reduced production costs. There's often a geographic separation between their customers and the place the goods come from. The more drastic the separation, the less likely it is that the customers will care about the consequences of the extraction, freeing companies to cut their costs of production.

I should pause to be clear that I don't mean to say that extractive industries are evil by their very nature. However, economics suggests and history by and large supports the idea that the internal forces that drive decisions for these business don't always feels so good to those on the outside.

Wind energy is often cast as a key technology that will rescue us from other, more polluting, extractive industries. This perspective makes a lot of people more willing to dismiss people who aren't thrilled by wind power as the occasional crank, while they'd happily support the same kinds of people if, say, mountaintop-removal was at issue.

Assuming that windmills are perfectly clean and that they have no side effects (uncertain), how could they possibly hurt the places in which they're installed? It's not a coal mine spewing tailings, right?

It's not. However, there are still a lot of factors worth contemplating. Wind farms tend to be out in the middle of nowhere, and generate power that needs to go to homes and businesses in denser areas. That means more transmission lines. Transmission lines, however ugly, have become a standard part of the landscape, though, so how can you complain about those?

Well, again, the investors developing these megaprojects want to get the maximum return on their investment. That means selling power where power is most expensive - typically not the places where the power is generated. In New York State, for example, electricity generally costs considerably more than it does in other states. Not only that, but power costs more Downstate - New York City and its suburbs - than it costs Upstate - where the wind farms are likely to go.

The answer, for smart investors? Build a huge powerline connecting the cheaper power to the more expensive power, and sell the same electricity at a significantly higher price. The side effect of that arbitrage will of course be higher prices in the area that used to have the cheaper prices - but that's not the investors' problem.

Sure, there might be local opposition, but that's what friends in Washington are for. Just like the other extractive industries, energy businesses of all kinds have some very nice support from a federal government that lately doesn't have much patience for federalism.

And hey, look at that - there's lots of money pouring into wind, lots of it coming from oilmen and power companies.

I don't mean to rain too hard on wind energy's parade. It's an important component of our future energy generation. At the same time, though, I think we need to give the promises of all kinds of energy investors the same kind of scrutiny we give the promises of oil companies. There's a lot more going on here than free energy.

4 Comments

Thomas Shelley said:

Simon--Gee... you have made some really good points. I haven't specifically been for or against wind power, per se. I have always thought that small-scale, distributed power is the best. That each home/business/neighborhood/village should have its own renewable power supply, perhaps with linkages between them to cover emergencies. Anything that is large-scale is going to dominated and controlled by the state and/or capitalists. This always means that the people get screwed and the rich get richer. The resources that are going into the big wind operations--mining for metals, processing the matals, petro used for energy, transportation and plastics, etc., etc.--are causing a level of environmental damage similar to that caused by the same resources being used for oil or coal or nuclear fired power plants. Sure, at least superficially there are fewer GHG emissions, but the on-going maintenance, construction of distribution lines and their maintenance, government tax subsidies to the power companies that will be paid by the tax payers, and so forth, may well make the giant wind farms as costly and unsustainable as nuclear plants in the long run. And the NYRI and involvement of the Big Oil capitalists is really scary!! It will be interesting to watch this all go down hill with the rest of the energy descent. Tom

George said:

Then, should I assume, Simon, that you would not be opposed to local, or perhaps personal or at most neighborhood scale wind power projects? I have not heard anyone claim we can just get by without any joules in the existing dwellings and workplaces we have.

Do you favor any energy alternative?

Solar, by the dubious standard that any sold commodity that can be obtained one place and sold in another, by which standard you include kilowatts obtained by any means, is also extractive. And the manufacture of silicon based or CdS based solar panels is an industry that generates toxic waste even if most of it is generated in China.

I agree that power distribution, as the profiteers of the grid now conceive it, has run head on into environmental quality and [see PNAS article on dwindling global Cu reserves] will exacerbate a looming fundamental mineral shortage...or just leave the undeveloped nations stuck in mud-hut standards of living.

Where do you begin? Its a pretty tough sell to suggest we reduce and redistribute the population to make localization of food and energy [as it was in the good old days of, for instance, the neolithic or the dark ages] possible with out any industrialized distribution means. But how do we get there? I have my own solution but I have decamped from civilization.

Yes, I support pretty much all kinds of energy alternatives, so long as they're built at a scale that localities can actually manage.

T. Boone Pickens proposing billions of dollars of 100 meter windmills - now cancelled, but the kind of conversation appearing when I wrote this - doesn't seem manageable.

Individuals putting solar, wind, microhydro, etc. on their own houses seems fine. Same for community-scale systems - let's bring back municipal power systems, really!

The problems arise when investors just see dollars, not communities or landscapes, and that seems to be far easier at large scale.

We've been through this before with massive hydro projects which we're no longer willing to tolerate building, even if it is the original alternative.

Yes, solar panels have real costs we need to address. I have some mild hopes for panel chemistry to get less toxic, but suspect better options involve heat-based models rather than direct electrical generation. Still, we'll have to see.

Jonathon Mucci said:

There are some major issues with wind power unfortunately. One is that birds are killed by the windmills quite frequently, and the other issue is that they are notorious for catching fire. That's something that you just don't hear much about, but it's the truth and the level of energy that they generate is questionable. I think Nikola Tesla's Coil approach is something that the nation needs to look into instead.

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This page contains a single entry by Simon St.Laurent published on February 23, 2008 7:09 PM.

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