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Dan Ervin: State’s pursuit of offshore wind power risky

As the 2012 General Assembly takes up offshore wind power in its closing days, it is important for all Marylanders to understand that such a pursuit will introduce additional risk to our state’s economy.

Dan Ervin

The high cost of offshore wind power ultimately will ripple through Maryland’s economy. First, residential customers will feel price increases, though the latest proposals before the legislature would seek to cap those effects. But the greater impact will be on commercial and industrial consumers. And — not surprisingly — these consumers will be sure to pass along as much of their increased electricity costs as possible to those residential customers who are supposedly being protected by price caps.

Offshore wind power is vastly more expensive than any other energy source, according to the U. S. Energy Information Administration. In its annual energy outlook for 2011, the agency compared the costs of new electrical generation sources and determined that the average levelized cost for an offshore wind power system entering commercial service in 2016 would be $243 per megawatt-hour. By contrast, advanced nuclear power would be $114 per megawatt-hour, and conventional combined-cycle natural gas plant cost would be $66 per megawatt-hour.

Some in Maryland see offshore wind power as an opportunity to reduce the state’s dependence on electricity made from fossil fuels — especially power that must be imported from other states. More to the point, Maryland is moving to meet a state standard requiring that 20 percent of our electric generation come from renewable sources by 2022.

But wind power’s credential as a clean energy source is belied by its Achilles’ heel — its intermittency. Wind turbines only produce electricity when the weather cooperates. This limits both wind power’s capacity value and its impact on limiting carbon emissions.

As an intermittent energy source, wind power cannot replace conventional sources of electricity generation. Fossil fuels and nuclear power account for 93.5 percent of Maryland’s electrical generation. Solar and wind provide less than 3 percent. Without some kind of technology to store large amounts of energy for use on days when the wind is not blowing or the sun is not shining, wind and solar will continue to have limited environmental value.

Diminished contributions

Current technology requires wind to work with traditional fuels such as coal or gas. Pairing wind power with coal or gas diminishes wind’s environmental contributions.

The green energy price tag for offshore wind will unnecessarily raise electricity rates, while diverting resources away from the need to expand the use of natural gas and nuclear power. Both are sources that can actually meet our growing need for clean energy.

Maryland should capitalize on the Marcellus shale formation that lies beneath part of our state and extends from upstate New York to West Virginia. Experts estimate that it contains enough natural gas to supply the entire country for the next 100 years. Even if that estimate is exaggerated, there is no question that this is the golden age of natural gas.

Thanks to the availability of shale gas, the United States is now the world’s largest producer of natural gas. The consumer benefits are substantial. The shale boom has lowered the price of gas below $2.50 per million Btu; less than a quarter of what it cost just four years ago. As officials study whether to permit drilling of Marcellus shale in Western Maryland, other states in our region are moving ahead with development of this energy resource — and creating many badly needed jobs.

Nuclear power remains an important part of Maryland’s energy mix. Calvert Cliffs’ twin nuclear reactors produce much of the state’s electricity and more than 90 percent of Maryland’s carbon-free energy — operating safely since the mid-1970s. In addition, the facility has provided high-quality jobs for Calvert County and a steady stream of tax revenue. UniStar Nuclear Energy has proposed constructing a third unit at Calvert Cliffs — something that could make Maryland a major player in a revitalized nuclear power industry.

Demonstration project

Instead of rushing forward with offshore wind, lawmakers should consider entering into a demonstration project with Delaware and New Jersey, providing important insight into offshore wind while spreading the costs and risks across a broader market.

Questions concerning equipment reliability in a salt-water environment would be better understood. What is the level and timing of the potential wind power? How will the 100-meter or taller towers fare in a “Nor’easter,” which the mid-Atlantic is famous for? Will offshore towers be more prone to lighting strikes than land-based towers? These are all important questions with economic consequences which need strong, unbiased answers.

A combination of natural gas and nuclear power could provide a lower cost and more reliable system. Focusing on these two sources would meet our energy needs, produce cleaner air, stimulate the economy, create jobs and serve the best interests of electricity users. We should consider these two opportunities and not be unnecessarily distracted by many of the unproven promises of offshore wind.

Dan Ervin, Ph. D., is associate professor of finance at Salisbury University. His email address is DMErvin@salisbury.edu. This commentary does not represent the official position or views of Salisbury University.