Wind Farm Project Canceled Due to Cheap Marcellus Gas

Those who oppose natural gas drilling do so because it threatens their ideology that renewable energy should be the only available option. Renewable energy supporters don’t seem to care that it costs 3-5 times more (that’s 300-500 percent more) for electricity from renewable sources than from fossil fuel sources. Rather than celebrate our good fortune in finding a cheap, abundant source of something that pollutes far less than other sources—shale gas—they attack it and claim it’s just as bad as the dirtiest coal. It’s sad, really.

Here’s yet another example of so-called renewables failing the economic test, an example sure to push some of the antis over the edge. It looks like the $1 billion Great Lakes offshore wind farm is yes, out of wind (bad pun intended). And the reason why it’s being canceled? Marcellus Shale gas—abundant, and cheap.

In the end, the head winds were just too strong for the huge Great Lakes offshore wind farm. The project, likely to cost upward of $1 billion, was too expensive in an economy still struggling to rebound from the recession.

Its electricity, while green, would simply cost too much, likely three to five times the current market rates.

Its public support was lukewarm, at best, with county legislatures across Western New York lining up to oppose the project.

“I’m pleased they decided to abandon it,” says Tom Marks, the Derby fisherman who is the New York director for the Great Lakes Sport Fishing Council and one of the project’s outspoken opponents. “But I am fearful that they may decide to go ahead with it at some time in the future.”

“I don’t know why it’s not being carried out. It’s a great idea,” says Robert M. Ciesielski, the chairman of the Sierra Club’s Niagara Group.

But at what cost? Ciesielski thinks the project’s shaky economics ultimately proved its undoing. With natural gas supplies bursting at the seams because of the explosion in drilling in the Marcellus Shale, wholesale power prices across New York have dropped dramatically since the recession began.

The average wholesale cost of power generated in New York last year was less than 6 cents per kilowatt hour, and last week, the average wholesale price in Western New York was under 4 cents, according to the New York Independent System Operator, which runs the state’s power grid.

“It’s a low-cost time. That’s what’s knocking renewables out,” Ciesielski says. “But that doesn’t mean we shouldn’t be building these projects.”*

*The Buffalo News (Sep 18, 2011) – Wind farm project runs out of air