Power Buoys or Expensive Anchors?

Commercial wave power soon may be coming to the Oregon coast. Last month, a New Jersey-based company, Ocean Power Technologies Inc., received the first federal permit to develop a 30-acre wave energy park near Reedsport. If successful, the facility would generate 1.5 megawatts of electricity from 10 buoys, enough to power 1,000 average homes.

While this sounds like a breakthrough for green energy, in fact it is just another example of Crony Capitalism. Ocean Power Technologies already has received grants of $4.4 million from the federal government and $420,000 from the Pacific NW Generating Cooperative, a $900,000 tax credit from the state of Oregon, and more than $430,000 from the Oregon Wave Energy Trust. Thus, each of the 1,000 homes receiving “wave power” will be subsidized by roughly $6,150.

That scenario assumes that the project ever produces electricity at all. The same company previously built the nation’s first wave energy generator off Hawaii, and it was decommissioned by the Navy after only two years of operation. Thus, there is a good chance that the Oregon project will never become commercially viable, and the taxpayer money will disappear.

This is the problem when politicians try to pick winners and losers in the economy. Nobody can predict the future, so most of the time they are wrong.

Wave energy yet may prove to be a great source of renewable energy, but choosing the right technology should be left to the private sector, where investors voluntarily bear all the risks as well as the rewards.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

Learn more at cascadepolicy.org.

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  • Rupert in Springfield

    In the old days five guys would get together and rob a bank or stick up a jewelry store. These days they get together and form an alternative energy group and rip off the taxpayer.

    The really asinine thing about all this is there is no point in this. Europeans love this sort of thing. Subsidizing new power generating technologies with tax payer money is something they are absolutly gaga over. They have done it with Ocean Technologies wave generators as well. SO why should we pay as well?

    The smart thing to do would be the same as what is the smart course when your neighbor bought the first Betamax, or the first Blu Ray player. You wait until someone else foots the bill for the super expensive latest and greatest, then you come in a bit later and buy the next generation unit which is twice as good and cost half as much.

    That is the course the US should pursue. Rely on conventional energy sources for the next several decades. Once alternative sources are developed, and bogus ones weeded out by Europeans doing all the subsidizing, then we come in and cherry pick what works for our own needs.

    Its a real simple formula. It saves the American taxpayer from overt scams, like ethanol, and more subtle ones, such as windmills. Sit back, let the Europeans subsidize this stuff for the next couple of decades, come in and buy at a discount.

    • 3H

      I think this idea is genius. Why stop there? Why spend money on research in almost any field? Drugs? Let the Europeans do it and let them do the clinical trials. If it doesn’t work, no harm to our citizens. Think of the money that could be saved in this country by not investing in R&D of almost any kind. Let the Europeans do it… find out what works, and adopt it ourselves. Think of all the dead-end research we could avoid. The money we could save!

      • Rupert in Springfield

        Astonishingly weak reply – because it is so easily defeated.

        First of all there is the easy to point out absurdity of your argument – advocacy of a method in one situation by no means implies that same method is applicable to all situations.

        Second there is the obvious sillyness that the government is not generally thought of as being in the R&D business, and the examples where it has been, especially in green energy have been notable for their extreme failures. Solyndra, ethanol, I probably don’t need to go on.

        I’ve already given you my advice, try and form your own, hopefully cogent argument. It tends to work better than trying standard liberal debate tactics like this one. Dean is so famous for trying this particular tactic, and it never working, that even he has largely given it up.

        • 3H

          LOL.. you’re a serious kind of guy, aren’t ya? I’d even say a little bit frothy 😉

        • DavidAppell

          The government is in the R&D business in huge way. Thank goodness; much of what eventually gets developed would not happen without fundamental research.

    • DavidAppell

      Your comparison of renewable energy to Betamax shows you don’t understand the first thing about the big picture, which is that we need to account for, and correct, negative externalities. Pay for the damage you do to the property of others.

  • valley person

    Its not “crony capitalism” and its not “picking winners and losers.” It is providing R&D and start up capital to renewable energy projects that are in the interest of the nation to develop to companies that have good ideas and development plans. Some of these will pan out and others won’t, but it is well worth the investment.

  • DavidAppell

    The smart thing to do is require that fossil fuel producers pay for the damage their product does to the private property of others — at least $120 B/yr.

    Then, renewables look very cheap.

    Is there someone opposed to requiring that companies and the users of products pay for the damage they do? Anyone?

  • concretehart

    perhaps henry ford and edison should have waited 110 years to produce thier inventions then they too could be subsidised Oh wait Ford did not take government money and is still in again paying dividends on thier stock but our government has yet to pay g m stockholders for the stock it stole to save jobs

    • DavidAppell

      You don’t understand the era in which you live: the Anthropocene. Ford and Edison invented technologies that weren’t massively adopted at the time. But now the waste products of their technologies have a large impact on the planet. As they say, climate change is the biggest market failure in history. When a market fails, government has an obligation to step in and make corrections, which often means funding something that private industry would not, but which leads to lower overall costs.

  • Oregonnative

    Whow, again we have our goverment with tax payers $ paying for something that the private industry will not even consider. I loved it when it was spoken on this blog about windpower. I mentioned if you the private investor believed in it, then invest your life savings in their stock. How many did it… very few. They wanted tax payers to do it…you and me. Since then those that had invested lost almost everything. Solar stocks lose over 75% of value and more daily. We now have windmills that cost millions to install and taxpayers (BPA) are paying through higher rates to subsided. Oh well as long as the greenies and our goverment state & federal feel good, it does not cost them anything as the burden is pay for collective through taxes called what ( cronylisms).
    Let me stop here before I really get frustrated.