These are lessons that we must learn: The two vital elements in renewable energy (RE) must proceed simultaneously: These are the generating equipment itself and the required grid infrastructure.
Some of the the windmill parks in the North Sea and Baltic are completed but the underground cables and transformer stations on land are not. The almost precipitous start of the program failed to coordinate the two indispensable elements: The generating units and their grid.
So the mills are being powered by diesel generators, covering the adjacent sea with diesel fumes. The reason is as simple as it is surprising. The wind farm operator, German utility RWE, has to keep the sensitive equipment — the drives, hubs and rotor blades — in constant motion, and for now that requires diesel-powered generators. Because although the wind farm will soon be ready to generate electricity, it won’t be able to start doing so because of a lack of infrastructure to transport the electricity to the mainland and feed it into the grid. The necessary connections and cabling won’t be ready on time and the delay could last up to a year.
What happened in Germany must not happen here. The development of RE in New Jersey must occur with the precision of clock work. Everything has to be synchronized so all the components are set to put together at the right time.
Despite all the lip service of the Christie administration toward RE, the fact is that the administration has been very shy in its approach. It looks more like a PR effort and not a genuine attempt to develop this vital industry of the future.
We can not expect that the private sector will jump into a risky enterprise alone. R&D almost inevitably require government and private sector cooperation. And the role of government is most effective in making capitalization cheaper.
The state government offers tax credits (REC) through the BPU. But REC do not balance out the risks for investors and therefore the latter have to pay a premium when borrowing capital. These high borrowing costs make the RE more expensive for consumers.
One of the main private companies involved with RE in New Jersey recently abandoned the state for the reasons mentioned just above.
The right approach is to offer investors Renewable Energy Payments, REP, which would lower the cost of the energy produced to the lowest level. REP include several elements, not only protecting the investors (which again, lower their capitalization cost and therefore the price of their product) but also protecting the existing conventional utility companies and the public.
That is why the partnership of public and private sectors is essential in the development of this industry and why I see that the State of New Jersey has the responsibility of preventing the repeat of the German errors.
With this article, I close 2011 and I wish all a Very Happy New Year. Good Luck.