October 1, 2012
A Maine company recently became the first to use underwater turbines to generate electricity from tidal energy. Although this marks a step forward in the development of renewable energy, The Heritage Foundation’s Michael Sandoval points out that taxpayer support for the Ocean Renewable Power Company Maine’s Cobscook Bay Tidal Energy Pilot Project runs to $10 million. And it generates enough power for just 25 houses.
Is the progress worth the cost? Here are five important statistics for consideration:
3 ‘Pros’—with Caveats
1. Job creation. The Department of Energy estimates the project to create 53 new jobs. Or according to a more optimistic forecast by Energy Secretary Steven Chu, up to 100 jobs will be “supported” by the development.
Caveat: Heritage’s Nick Loris warns:
Taxpayer-funded programs do not create jobs; they shift them from one sector of the economy to another, Loris recently wrote. The opportunity cost of government spending is the lost labor and capital extracted from other sectors of the economy to artificially support the politically preferred ones. If underwater turbines are a good investment, companies shouldn’t need subsidies to build them.
2. New energy source. The project is expected to generate enough power for 25 to 30 homes.
Caveat: A 10 million investment will only power 25 to 30 homes.
3. Increased energy predictability. Tidal energy generates power more predictably than other forms of renewable energy, which is helpful to power transmission managers.
Caveat: The Energy Department does not have “a specific plan on expanding the energy portfolio.”
1. Electricity will cost more: The electricity produced by tidal energy will be sold at an initial price of 21.5 cents per kilowatt hour, nearly double the current electricity cost inMaine.
2. The government spends more money. This $10 million investment in the underwater project marks the largest expenditure to date by the Department’s Water Power Program. Sandoval notes that:
The Energy Department has funded more than $87 million in marine and hydrokinetic projects since fiscal 2008, with more than 45 percent going to three states—Maine, Oregon, and Washington. Private industry received more than $49.4 million of the total, or 60 percent.
What do you think? Is this new technology worth millions of tax payer dollars?