News about Solar, Wind and alternative green power technologies

Wind power is quite expensive to build and costs almost nothing to manage. That being the case, could it curtail profits of the commercial utilities that are now charging extra to power up your residence as they burn the decomposition  of ancient organics? Experts say that investors need not worry too badly, since according to Lasan Johong of RBC Capital as we come to count on wind power prices could go up substantially.

Even though the power companies do not have a raging monopoly as they had at one time, because of chaotic distributions of power producers to the distributor, the basic programs remain pretty much unbothered. According to deep pocketed Warren Buffet, the power companies take care of their clients utilizing state regulators, and in return, clients allow then a fixed return on any investment.

So then, what occurs when you add complimentary electricity into the game? A renewed enthusiasm for renewable energy that comes disguised as government mandates and incentives makes utilities, investors and property owners raise a windmill where ever the wind is blowing. The guaranteed investment return that comes with new wind power facilities does not end up with the companies that manage the power grid; instead, it goes to the people and businesses with the land and the money.

This does not seem like a very good arrangement for the power companies at first look. Electricity prices are loaded with regulations and engineered to let the utilities earn back their costs and make a little profit as well. Overnight, with a small demand for electricity and laws that demand purchases from wind farms, the rates for electricity could theoretically fall to zip. 

That situation will not last long says Johong. Power companies that buy electricity from the wind farms will be looking to resell the power at cost that would include a markup for outlay. Wind power is not very likely to meet the demand, particularly overnight, and utilities will be able to choose the wind farm they prefer to purchase from, finding a source for power that lets them pass their costs back to the consumer.

If wind power became a requirement included by utilities this might also raise the price of power making it that much more volatile. Compared to other types of power generation, wind turbines are expensive options. Johong estimates their costs to be about eight thousand dollars per kilowatt hour since there is an inclination for them to function at a quarter of what their pinnacle capability is. This is the expense of counting on an unpredictable option like wind. Look at wind compared to coal at [$3,500 a KWh], geothermal at [$1,000 a KWh] and then nuclear coming in at [$5,000 a KWh]

As the power companies begin to count on wind turbine power generation more than they do currently, conventional power plants will begin to close, [with their pollution this is the whole point of renewable alternatives], and begin to depend on backup power when the situation is critical and the wind is not cooperating. This kind of power plant backup can be costly to operate and Johong believes prices for peak usage may increase significantly, only adding more unpredictability to electricity rates.

The brightest indicator that wind power is not threatening to the utilities is Warren Buffett immodestly spelling out to shareholders at the beginning of this year that Berkshire Hathaway had heavily financed wind power ventures. The world famous investor his corporations major utility, MidAmerican, raised its wind power presentation from zero up to one fifth capacity by injecting $1.8 billion dollars into it in 2008, making MidAmerican the largest wind power producer of any American utility.